How margin works

Margin is a loan from your broker secured by the securities in your account. You can borrow up to half the price of most stocks when you buy them, you pay interest on the balance every month, and if the account falls far enough the broker can sell your holdings to cut the loan.

The three numbers that matter

50% to start

The Federal Reserve’s Regulation T lets you borrow up to 50% of the purchase price of margin securities. Buy $20,000 of stock with $10,000 of your own money and a $10,000 loan, and you are at the limit.

25% to stay

FINRA Rule 4210 requires your equity to stay at 25% or more of the market value of the stocks you hold. Brokers set “house” requirements above that, often 30% to 35% and more for volatile or concentrated holdings. Vanguard publishes 35% for most marginable securities.

$2,000 minimum

You need $2,000 of equity to borrow at all. Below that you can hold a margin account but trade only with cash.

Worked example

Your $20,000 of stock falls to $13,000. The loan is still $10,000, so your equity is $3,000, 23% of the account. At a 25% requirement that is a call: you need equity of $3,250, so $250 more. At a 30% house requirement the call came earlier, when the stock was worth about $14,286. The margin call calculator does this for your own numbers.

What changed in 2026

For decades FINRA flagged anyone who made four or more day trades in five business days as a “pattern day trader” and required $25,000 of equity. In 2026 FINRA replaced that with intraday margin requirements, effective June 4, 2026: your broker now checks during the trading day that your equity covers your open positions, and the trade-count test and the $25,000 floor are gone. Repeatedly failing to cure an intraday deficit can get an account restricted for up to 90 days.

Brokers can phase the change in through October 20, 2027, so ask yours which rules it applies today.

What it costs

Interest accrues daily on the loan balance, at the rate for your balance tier, and is charged monthly. Published rates on a $100,000 balance ran from under 5% to over 11% depending on the broker when this was written; see the rate board. Unpaid interest is added to the loan, which raises both the interest and how close you are to a call.

The risks the SEC spells out

The SEC’s margin bulletin lists four risks: you can lose more than you deposited; your broker can sell your securities without contacting you and chooses which ones to sell; it can raise its maintenance requirement at any time; and you are not entitled to extra time to meet a call.

Sources: Regulation T, 12 CFR 220.12; FINRA Rule 4210; FINRA Regulatory Notice 26-10; FINRA, Understanding the New Intraday Margin Requirements; SEC, Understanding Margin Accounts.