Definition
Money you must have in your account to hold a leveraged position. It works differently for futures and for stocks.
The story
For futures, margin is a good-faith deposit (a performance bond), not a loan. The exchange sets an initial margin to open a position and a lower maintenance margin to keep it, and brokers can require more. For stocks, buying on margin means borrowing money from your broker to buy more shares than your cash covers, and you pay interest on the loan.
Why markets watch it
Margin rules decide how much leverage a trader can use, and exchanges can raise them when markets get volatile.
Connects to
We explain why it moves markets. What you do with it is your call. Commentary and education only. Not financial advice. All terms