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Mr. Jones has three shares in his account with a total market value of $90,000: $30,000 in ABC, for which it has a substantial long-term profit (i.e. capital), $30,000 in DEF, in which it has a significant loss (which could be used to offset equity gains sold at the beginning of the year) and $US 30,000 to GHI in which it has a short-term profit for tax purposes. Each action has a maintenance margin of 25 per cent. Mr. Jones has an unfulfilled interview call of $6,000, so the broker has exhausted some of his securities. The broker decided to sell GHI. Mr. Jones is in a very high tax class, so the sale gives him a hefty tax bill.

Mr. Jones is angry that he would have preferred the broker to have exhausted one of the other two securities. Suppose you buy a stock at $50 and the share price rises to $75. If you bought the stock from a cash account and paid it in full, you will receive a 50 percent return on your investment (your $25 profit is equal to 50% of your initial investment of $50). But if you bought the stock on Margin – pay $25 in cash and borrow $25 from your broker – earn a 100% return on the money you invested (your $25 profit equals 100% of your initial $25 investment). You can also pay your broker interest on the $25 you borrowed. For more information, please visit the FINRA website and invest with boreal funds: No „Margin“ for Error, which is left to other articles, statistics and resources for margin trading. For other financial products, the initial margin and maintenance margin vary. Stock markets or other regulators set minimum margin requirements, although some brokers may meet these margin requirements. This means that the margin may vary depending on the broker. The initial margin for futures is generally much lower than what is needed for equities.

While investors must pay 50% of the value of a trade, futures traders cannot be forced to find 10% or less. If a margin call is unexpected, it can result in a domino effect of the sale, which leads to other margin calls, etc., and effectively causes an asset class or asset class to fall.