In which scenario does margin trading become advantageous?

Margin trading becomes advantageous primarily when seeking to amplify potential returns on investment. This practice allows traders to borrow funds to increase the size of their trades, thus enabling them to take larger positions than they could with just their own capital. By using leverage, traders can potentially enhance their profits on successful trades, as the gains are calculated on the total amount invested rather than just their own funds.

In a market that is moving in the trader's favor, the returns can be significantly higher, making margin trading an appealing option. It is important for traders to be aware, however, that while the potential for profits is higher, the risks are also amplified, meaning that losses can exceed the initial investment if the market moves against them.

The other options do not provide effective scenarios for utilizing margin trading:

• Trading only with personal funds does not take advantage of the leverage margin trading offers.

• Margin trading in a downturn can be risky, as it increases the potential for losses during unfavorable market conditions.

• Trading in a falling market generally suggests a bearish outlook, and engaging in margin trading could exacerbate financial losses if the trader is caught on the wrong side of the market movement.