What is Margin?
Margin is the collateral, typically cash or securities, that an investor must deposit to cover the credit risk of a leveraged position.
Margin refers to the amount of money or securities an investor must deposit with their broker as collateral when borrowing money to buy securities (buying on margin) or when trading derivatives like futures and options. It represents the investor's own equity in the position.
Brokers set minimum margin requirements. If the value of the leveraged position moves against the investor and the equity falls below the maintenance margin level, the broker will issue a margin call, requiring the investor to deposit more funds. Failure to meet a margin call may result in the broker forcibly closing the position to limit losses.