Glossary · Markets & Trading Mechanics

Margin

Funds a trader must deposit to open a leveraged position.

Margin is the collateral you post to open and maintain a leveraged trade or margin account. The broker sets minimum margin requirements; if losses reduce your equity too far, you may get a margin call asking you to deposit more cash or reduce the position.

Margin is not “bonus money for free.” It is skin in the game for a borrowed-exposure position. Understanding maintenance margin and liquidation rules is essential before using it.

Example

To buy $10,000 of stock on margin with a 50% initial requirement, you might deposit $5,000 of your own funds and borrow the rest.