Leads to small margins

Maintenance margin commodities

For securities, the definition of margin includes three important concepts: the Margin Loan, the Margin Deposit and the Margin Requirement. The Margin Loan is the amount of money that an investor borrows from his broker to buy securities. The Margin Deposit is the amount of equity contributed by the investor toward the purchase of securities in a margin account. The Margin Requirement is the minimum amount that a customer must deposit and it is commonly expressed as a percent of the current market value. The Margin Deposit can be greater than or equal to the Margin Requirement. We can express this as an equation:

Margin Loan + Margin Deposit = Market Value of Security
Margin Deposit >= Margin Requirement

Borrowing money to purchase securities is known as "buying on margin". When an investor borrows money from his broker to buy a stock, he must open a margin account with his broker, sign a related agreement and abide by the broker's margin requirements. The loan in the account is collateralized by investor's securities and cash. If the value of the stock drops too much, the investor must deposit more cash in his account, or sell a portion of the stock.

Securities Initial and Maintenance Margin

The Federal Reserve Board and self-regulatory organizations (SROs), such as the New York Stock Exchange and FINRA, have clear rules regarding margin trading. In the United States, the Fed's Regulation T allows investors to borrow up to 50 percent of the price of the securities to be purchased on margin. The percentage of the purchase price of securities that an investor must pay for is called the initial margin. To buy securities on margin, the investor must first deposit enough cash or eligible securities with a broker to meet the initial margin requirement for that purchase.

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Self-Regulatory Organizations; ICE Clear Europe Limited; Order Granting ..  — Insurance News Net
ICE Clear Europe states that the changes to the Risk Policy amend the calculation of CDS initial margin requirements to comply with margin requirements under EMIR Article 41 and Article 24 of the implementing Regulatory Technical Standards. /5/ ICE ..

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Popular Q&A

avatar
What are the margin requirements for commodity trading?

A person at Scottrade told me that you must have 1 million dollars in a margin account to trade commodities. Was he blowing smoke somewhere, or is this correct?

He's blowing smoke big time.
Most traders start with $10,000.
Margin is determined by the contract you want to trade.
Oil margin currently is around $10,000 per contract.
Corn is around 3,000.
If you really want to learn how to trade commodities from a 35 year veteran I suggest you go to
The guy know what he's talking about and trades commodities the way they should be traded. (so you can sleep at night)

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