Q: Is it possible to borrow money to speculate on stocks?

A: Just because you can do something, doesn’t mean you should.

The basic answer to your question is: Yes. Investors can borrow money from brokerage firms. When you borrow money from your broker, it’s called a margin loan. You can use the money you’ve borrowed to make just about any investment you choose.

Nearly all brokers offer margin loans, and they’re eager for investors to take them because, as with any loan, they charge you interest.

Lending money to investors is an easy way for brokerage firms to make money. The brokers can borrow money for next to nothing, since money market rates are essentially zero. The brokers can then turn around and lend the money to investors at a higher rate, and keep the difference.

There’s no question, you can supercharge your returns by using borrowed money if you invest in the right stock at the right time. Let’s say you buy a $10 stock that goes to $20. If you used your own money, that would be a 100% gain. But if you put up just $5 of your own money and borrowed the other $5, you’d have a 300% return, minus your interest costs.

But there are a couple of caveats. First, your broker is not obligated to lend to you. You’ll need to pass a credit check, as you would when you borrow money from any lender.

Even more important: Speculating with borrowed money is highly dangerous and not a good idea for most people.

For one thing, the brokerage will use your account as collateral. If the price of an investment you bought on margin falls, you’ll need to come up with additional cash or collateral to cover the losses or the brokerage will sell the investment and stick you with the bill.

Specifically, brokers require you meet a maintenance margin requirement. If the value of your investment falls so that you don’t have enough of your own money on the line, the investment is sold or you have to put cash into your account as what’s called a margin call.

Consider the earlier example. Let’s say the broker requires a 25% maintenance margin. And let’s say you borrowed $5 to buy a $10 stock. That means the position has a 50% margin ratio. You calculate the margin ratio by subtracting the $5 you borrowed from the $10 value of the stock and divide by the $10 value of the stock.

If the stock falls to $6.50, you have a margin problem. Your margin has fallen to 23% of the position. You’ll need to put money into your account to get the level of margin back above 25%, or the broker will sell part of the position to get you back in compliance.

Margin loans are dangerous for many reasons. For one, you’re giving up one of the biggest advantages of individual investors, which is patience. If a stock falls in value, you might be forced to sell when you don’t want to. Also, by amplifying your risk, you may be more likely to make a bad decision, as emotion inevitably takes control.

Matt Krantz is a financial markets reporter at USA TODAY and author of Investing Online for Dummies and Fundamental Analysis for Dummies. He answers a different reader question every weekday in his Ask Matt column at money.usatoday.com. To submit a question, e-mail Matt at mkrantz@usatoday.com. Click here to see previous Ask Matt columns. Follow Matt on Twitter at: twitter.com/mattkrantz