Trading Dictionary Index
Find Dictionary Definition:

Initial Margin

The Initial Margin is the amount set aside from your account when you place a trade. This amount provides a buffer against a loss on your position and protects the broker and clearing house from carrying a loss should your trade not succeed.

If the position moves against you then your broker may make a Margin Call for additional funds if your Maintenance Margin falls below a certain level.

The relationship of the Initial to Maintenance Margin is often 2 to 1. In other words, if you require 50% to enter a position then your account needs to maintain 25% to keep the position open.

Do you have a trading or investing definition for our dictionary? Click the Create Definition link to add your own definition. You will earn 25 bonus reputation points for each defintion that is accepted.

Is this definition wrong? Let us know by posting to the forum and we will corrent it.

Dictionary Index