Access Forex

Menu
  • Forex Glossary
  • Forex Articles
  • Trading
  • Investing
  • Cryptocurrency
Menu

Margin (Margin Requirement) Definition

Posted on October 25, 2019 by Matthew Conell

Definition

The term allowance refers to some minimum amount of resources necessary to encourage a investment standing. Once an investor buys securities margin, they have been financing some of the cost of capital borrowed by the broker.

Explanation

When buying stocks, it’s feasible for that investor to borrow funds from your brokerage firm to cover some of the cost price. The buyer ‘s gross profit, or gross condition, represents the capital that the trader needs to provide to encourage their investment standing. Generally, margin drops into one of two broad classes:

  • Initial Margin: whether there are lots of standards, Regulation T of the Federal Reserve Board governs perimeter requirements and conditions the initial gross profit for stock is 50 percent. This usually means the investor needs to provide 50 percent of their funds used to get the stockexchange.
  • Maintenance Margin: at the case the purchase price of the securities drops, maintenance gross profit turns into the minimum allowance offered by the buyer. In case the investor is unable to keep their equity at the investment over the maintenance margin threshold, then a margin call will probably occur. Regulation T of the Federal Board created a threshold of 30 percent whilst the maintenance dependence on stock purchased on margin.

Related Posts:

  • Gross Margin Definition
    Gross Margin Definition
  • Margin Call Definition
    Margin Call Definition
  • Pretax Margin Definition
    Pretax Margin Definition
  • The Ultimate Guide To Crypto Margin Trading 2020
    The Ultimate Guide To Crypto Margin Trading 2020
120 Bonus

Recent Posts

  • YES Bank Shares Down on Early Trade Ahead of Board Meeting
  • Top Cryptocurrency Gainers Exclude XRP on the List
  • World Shares had Shaky Start After Fed Reserve Announcement
  • Yen and Franc Strengthen as Tensions Grow at the Middle East
  • UAE Shares Dipped on Increasing US-Iran Tensions
©2021 Access Forex | WordPress Theme by Superbthemes.com