Margin Trading

Multiply your buying power

Having a margin account lets you borrow up to 50% of your equity to buy additional securities. You can also use your buying power for low-cost loans simply by writing a check or using your debit card.

Margin trading3 involves borrowing against securities you already own to purchase additional securities. The following example shows how the same trade works in a cash account vs. margin account.

Cash Account

If an investor buys a stock for $50 a share and the stock price rises to $60, the profit per share is $10. If the stock price drops to $40, the loss per share is $10. So the gain or loss is 20%.

Margin Account - Gain

If an investor buys stock for $50 a share, he or she pays $25 per share (the initial margin) and borrows $25. If the stock rises to $60, the profit is still $10 - but it's a 40% gain on the initial investment. Of course, the borrowed $25 per share, plus interest, needs to be repaid.

Margin Account - Loss

If the stock price drops to $40, the loss will be $10 per share plus the cost of the margin loan. In this example, the investor loses 40% of his or her cash investment and must still pay back the margin loan plus interest.

Why E*TRADE for Margin Trading

Powerful tools for incisive decisions:
Tools like Margin Calculator, Requirement Lookup and Margin Analyzer help you strategize, plan and execute margin trades more efficiently and effectively.

Greater leverage with low maintenance requirements:
E*TRADE’s margin account maintenance requirement on most equity securities is just 25%, amongst the lowest in the industry.

Low interest rates:
Earn more of every dollar’s yield with rates as low as 3.89% on high margin balances. Different rates are applied based on a trader’s margin balance.

Increased flexibility:
Debit cards and checks provide a convenient way to access excess cash or equity in your account as a line of credit.

Portfolio Margin capabilities:
Provide even lower requirements for those who want a higher degree of leverage4.

Margin loans carry risk.

When margin is used for trading, a margin loan also carries risk if the value of your investment drops significantly. The equity in your account should always be at least equal to your Account Maintenance Requirement. If it drops below that level, you may have a margin call; which will require you to make a deposit of cash or securities. Failure to meet a margin call can result in the sale of securities in your account without prior notice to you.


Understand the risks associated with margin.

  • Investing on margin is investing with borrowed money.
  • You are responsible for repaying the loan plus interest.
  • The firm can increase its house maintenance margin requirements at any time and is not required to provide you with advance written notice.
  • You are not entitled to an extension of time on a margin call.
  • It's possible to lose more money than you deposited in the account.


Margin Requirements and Account Maintenance Requirement

Industry rules require that investors have at least $2,000 (the minimum margin) in a margin account before purchasing stocks on margin, and that a minimum equity of 25% is maintained. This is the minimum mandated amount, and firms can and do impose higher requirements. E*TRADE’s house requirement of just 25% makes ours one of the lowest in the industry.

Each individual security carries its own requirement. (Volatility or a concentrated position could make any individual requirement higher than others.) The combined total of each individual requirement is added together and that sum is your Account Maintenance Requirement.

If the equity in the margin account falls below the house requirement of 25%, E*TRADE will issue a margin call requiring you to deposit cash or securities.

Open an account today and get up to $600

Plus 60 days of free trades for deposits of $10k or more1

How it works »

Get up to $600 when you open an IRA

Plus 60 days of free trades for deposits of $10k or more1

How it works »