Investing Answers Building and Protecting Your Wealth through Education Publisher of The Next Banks That Could Fail
Investing Answers Building and Protecting Your Wealth through Education Publisher of The Next Banks That Could Fail

Minimum Margin

What it is:

Minimum margin is the lowest balance a trader may have in a margin account according to federal regulations.

How it works (Example):

When a trader engages in trading on margin, the margin account must contain at least $2,000 to satisfy regulations set by the Federal Reserve. This amount is called the minimum margin, and individual brokerage houses may raise it at their discretion.

Why it Matters:

If the balance of a trader's margin account dips below the minimum margin, it results in a margin call whereby the trader must increase the balance or sustain heavy penalties.