What is the difference between a margin and a cash account?

Margin and cash accounts work differently, especially when it comes to leverage, available balance, and how profits and losses are handled. Here’s a simple breakdown of the main differences:

Margin Account:
-A margin account allows clients to trade leveraged products.
-The available balance is affected by the PNL of open positions.
-If open orders are in profit, the profit is automatically added to the available balance.
-If open orders are in loss, the loss is automatically deducted from the available balance.
-Clients can reinvest profits immediately to open new positions, even before the funds are fully settled.
-The available balance may go into a negative balance.

Cash Account:
-A cash account does not allow trading on leveraged products.
-The available balance is not affected by the PNL of open positions.
-Profits cannot be reinvested immediately and can only be used once they are fully settled.
-The available balance will never go negative, as clients can only trade with the funds available in the account.