Key Concepts

Margin

Margin is the amount of capital required to open a trade. Brokers and clearing firms use margin to make sure that there is enough money in an account to cover potential losses. Portfolio margin (PM) is a tool that allows brokerage firms to let traders to take on more leverage than in a standard margin account. PM reflects the actual risk of an account, rather than a fixed percentage. It is how market makers and professional traders have been margined for decades and is similar to the margin on futures and futures options.

Margin Videos