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StockCram is not a broker-dealer, investment adviser, or financial institution. All content is for educational and informational purposes only and should not be construed as personalized investment advice. Consult a qualified financial professional before making investment decisions. Past performance does not guarantee future results.Simple Definition
Borrowed money from your broker to buy investments. Amplifies gains AND losses.
Why It Matters
Margin is a double-edged sword. With $10,000 and 2x margin, you control $20,000. A 10% gain becomes 20% ($2,000 profit). But a 10% loss also becomes 20% ($2,000 loss) - and you still owe interest on the borrowed money.
Key Points
- Initial margin: minimum equity required to open a position (typically 50%)
- Maintenance margin: minimum equity to keep position open (typically 25-30%)
- You pay interest daily on borrowed funds - this eats into returns over time
Related Terms
Common Questions
Borrowed money from your broker to buy investments. Amplifies gains AND losses. Margin is a double-edged sword. With $10,000 and 2x margin, you control $20,000.
Margin is a double-edged sword. With $10,000 and 2x margin, you control $20,000. A 10% gain becomes 20% ($2,000 profit). But a 10% loss also becomes 20% ($2,000 loss) - and you still owe interest on the borrowed money.
Initial margin: minimum equity required to open a position (typically 50%)
Maintenance margin: minimum equity to keep position open (typically 25-30%)
You pay interest daily on borrowed funds - this eats into returns over time