A margina account is a brokerage account that allows investors to borrow money (leverage) from the broker to buy securities. A margin account is a credit account with a broker that can be used for stock trading. The funds available under the margina loan are determined by the broker on the basis of the securities held and made available by the trader acting as collateral for the loan. As a general rule, the broker has the right to change the percentage of the value of any security that he allows to make towards other advances to the trader and can therefore make a margin call if the available balance falls below the amount actually used. In all cases, the broker usually calculates interest and other fees on the amount deducted from the margin account. Suppose the maintenance margin is 25%. This means that the client must respect a net worth of 25% of the total share capital. This means that they must have a net capital of $50,000 × $0.25 – $12,500. So at what price would the investor receive a margin call? For the P share price, the share capital (in this example) is 1,000P. Margin credits became popular in late 1800 to finance the railways. In the 1920s, margin requirements were loose.

In other words, brokers have required investors to deposit very little of their own money, while the Federal Reserve`s margin requirement (in accordance with T regulation) now limits debt to 50%. In the 1920s, leveraged interest rates of up to 90% of debt were not uncommon. [1] When the stock market began to contract, many people received margin calls. They had to deliver more money to their brokers or their shares would be sold. Since many people did not refuse to hedge their margin positions with their equity, their shares were sold, resulting in further market declines and other margin calls. This was one of the most important factors that led to the stock market crash of 1929, which contributed to the Great Depression. [1] However, as noted in the 1994 article by Peter Rappoport and Eugene N. Whites in The American Economic Review, “Was the Crash of 1929 Expected,” an article published in 1994,[2] all sources indicate that from late 1928 or early 1929, “the requirements of the margin have moved to a new historical level. The top interest rates for home loans were 40 to 50 percent. Brokerages followed suit and demanded a higher margin from investors. For example, if a trader earns 10% of a margin in two months, that would represent about 77% of annualized financial products, with the exception of shares that can be purchased on margin. Futures dealers also often use margina, for example. On the other hand, the brokerage calculates interest on marginal funds while the loan is pending, which increases the cost of the investor for the purchase of the securities.

If the securities lose value, the investor will be underwater and will also have to pay interest to the broker. Marginal accounts allow investors to invest with their brokers` money. They act as levers and can thus enlarge and win. But they can also increase losses and, in some cases, a brokerage can sell an investor`s securities without notification, or even take legal action if the investor does not meet a margin call. For these reasons, marginal accounts are generally intended for more demanding investors who are able to understand and manage the additional risks they entail. But Marge is a double-edged sword, and losses are also increased. In addition, if the investor`s equity in the account falls above a certain point, say 25% of the total amount of the purchase (called the maintenance margin), the brokerage company can make a margin call, which means that you must deposit more cash in a few days or sell some of the shares to offset all or part of the difference between the actual share price and the maintenance margin. Margin Performance (ROM) is often used to assess performance, as it represents net income or loss relative to the