Maintenance Margin
The minimum equity percentage you must keep in a margin account.
What is Maintenance Margin?
The ongoing floor on account equity after a position is open. FINRA sets the industry minimum at 25% of market value; most brokers require 30-40%. Fall below it and the broker issues a margin call.
Maintenance Margin: a worked example
$20,000 position with $10,000 borrowed. If the value falls to $13,000, equity is $3,000 - about 23% - and you are below a 25% requirement.
What is the difference between Maintenance Margin and Initial Margin (Reg T)?
Initial margin is what you need to get in (50%); maintenance margin is what you need to stay in (~25-30%).
Often confused with Initial Margin (Reg T) - see Maintenance Margin vs Initial Margin (Reg T) side by side.
More terms in Positions & Trade Mechanics
Long Position
You own the asset and profit when its price rises.
Short Position (Short Selling)
You borrow shares, sell them, and profit if the price falls.
Margin
Borrowing from your broker to buy securities, using the account as collateral.
Cash Account
An account where every purchase is paid for in full, no borrowing.
Leverage
Using borrowed money to increase exposure relative to your own capital.
Initial Margin (Reg T)
The equity you must put up to open a margin position - generally 50%.
Margin Call
A demand to add cash or securities after equity falls below maintenance.
Short Squeeze
Rising prices force short sellers to buy back, pushing prices higher still.