Maintenance Margin


The minimum amount of equity that must be maintained in a margin account. NYSE and FINRA a 25% margin of the total market value of the securities in the margin account. This is a minimum for all margin accounts and many brokerages have higher maintenance margin requirements of 30-40%.

Maintenance Margin example

If you had a margin account in which your initial margin was 1000$ and because of a loss on your asset, your maintenance margin then rose to 1200$. You would get a margin call and would have to post the additional margin or your broker will automatically close your position out. This does not mean that you have not had a loss, however, you will still have lost money on your account since you had a loss on your asset. Posting aditional margin only allows you keep your position “open” or essentially to keep “playing”.

Note: HowTheMarketWorks does not require maintenance margin so you should be extra careful with your short positions!

Comments are closed.