How to Use the Margin Trading Risk Calculator
In margin trading, a forced liquidation (margin call) occurs when your margin ratio falls below the broker's maintenance requirement. Enter current price, shares, margin loan, and maintenance margin percentage to find the exact liquidation trigger price and your current risk level.
Trigger price formula: Margin Loan × Maintenance Margin (%) ÷ 100 ÷ Number of Shares. If price drops to this level, the broker may force-sell your shares. Most US brokers set maintenance margins between 25-40% of the portfolio value.
Frequently Asked Questions
A margin call occurs when your account equity falls below the broker's maintenance margin requirement. The broker may force-sell your securities to bring the account back to the required level, often at a loss.
FINRA requires a minimum of 25% for long positions, but most brokers set it at 30-40%. Check your broker's specific requirements, as they vary.
Keep your ratio well above the maintenance requirement. Deposit additional funds when prices drop, or reduce margin exposure by selling some holdings. Limit margin borrowing to 25-30% of your total investment value.