What Maintenance Margin Means
Maintenance margin is the minimum level of equity — your account value minus what you have borrowed — that must remain in a margin account while a leveraged position stays open. It is different from initial margin, which is the amount required to open the position in the first place. Once the trade is live, the maintenance margin acts as an ongoing safety threshold. If losses reduce your equity below this threshold, the broker can issue a margin call, requiring you to deposit more funds or close positions.
Maintenance margin requirements are typically expressed as a percentage of the position's current market value. Requirements can vary by broker, asset type, and market conditions, and brokers often set their own "house" requirements above any baseline minimums.
Why It Matters
Maintenance margin is the mechanism that protects the lender — your broker — from losses on money it has lent you. For the trader, it defines how much adverse price movement a position can absorb before forced action is required. Understanding it helps you:
- Size positions so normal volatility does not trigger a margin call
- Keep a cash buffer above the minimum threshold
- Anticipate what happens in fast-moving markets, where brokers may liquidate positions without waiting for you to respond
Because maintenance margin interacts directly with leverage, small price moves can have outsized effects on account equity.
A Simple Example
Suppose you buy $10,000 of stock using $5,000 of your own money and $5,000 borrowed from your broker. Assume the maintenance margin requirement is 25% of the position's market value.
- If the stock's value falls to $6,000, your equity is $6,000 − $5,000 borrowed = $1,000.
- The required maintenance margin is 25% of $6,000 = $1,500.
- Your equity ($1,000) is now below the requirement ($1,500), so a margin call is triggered.
You would need to deposit additional funds or reduce the position to restore the required equity.
Common Mistakes
- Confusing initial and maintenance margin. Meeting the opening requirement does not mean you are safe afterward.
- Running positions right at the minimum. Even routine volatility can push equity below the threshold.
- Assuming you will always get time to respond. In volatile markets, brokers may liquidate positions immediately.
- Ignoring house requirements. Many brokers set stricter thresholds than baseline minimums, and they can change these with little notice, especially for volatile or concentrated holdings.
- Forgetting borrowing costs. Interest on the borrowed amount steadily erodes equity over time.
What to Verify Before Acting
Before trading on margin, check your broker's specific maintenance requirements for the exact instruments you plan to trade, how and when margin calls are communicated, and the broker's liquidation policy. Requirements can differ significantly across products such as stocks, options, and CFDs. You can compare account features side by side with the compare brokers tool and review margin-related costs using the cost of trading tool.
Limitations and Verification Note
This entry is a general educational draft and does not describe any specific broker's rules, current requirements, or regulatory standards, which vary by jurisdiction, product, and firm and can change without notice. Margin trading involves the risk of losing more than your initial deposit in some products. Always confirm current margin terms directly with your broker and read the official risk disclosures before using leverage.