Margin is the difference between two amounts. In the financial world, the term is often used to indicate the difference between costs and revenues, or between purchase and selling prices. It shows how much room there is between what something costs and what it generates.

Margin is used to make profit or price differences clear.

In companies, the term profit margin is usually used. This is the portion of revenue that remains after costs have been paid. The higher the margin, the more profitable a company is.

In trading, margin can also refer to the difference between the purchase price and the selling price of a product. For investors, margin is important because it indicates something about a company’s financial health or about the difference between two trading prices.

Short example:

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