Minimum Margin

Minimum Margin

The initial amount required to be deposited in a margin account before trading on margin or selling short. For example, the NYSE and the NASD require investors to deposit a minimum of $2,000 in cash or securities to open a margin account. Keep in mind that this amount is only a minimum, some brokerages may require you to deposit more than $2,000.

Notes:

When buying on margin, there are key levels which must be maintained throughout the life of a trade as governed by the Federal Reserve's Regulation T. The minimum margin is the first requirement where a broker can't extend any credit to accounts with less than $2000 in cash (or securities). Second, the an initial margin of 50% is required for a trade to be entered. Third, the maintenance margin says that you must maintain equity of at least 25% or be hit with a margin call.

See also: Broker's Call, Buying Power, Call Loan, Call Loan Rate, Equity, Initial Margin, Leverage, Maintenance Margin, Margin Account, Margin Call