What is Trading on the Equity?
Trading on the equity has to do with making use of borrowed funds to increase or expand the investment of capital. The hope is that by following this pattern, the return that is realized on the trading will ultimately cover any finance charges associated with borrowing funds for an investment will be offset and a profit still realized. Trading on the equity is not an unusual means of leveraging finances in order to position a company to take advantage of emerging markets or opportunities to expand the company’s presence in an existing market.
