The most common way to buy shares or other securities is to transfer money from your bank account to your brokerage account and use this money to buy shares (or funds, bonds, etc.). In addition, there is the possibility of trading on margin, for which a so-called margin account is necessary. In this case, you have the possibility to borrow money from your broker and thus increase your buying power.<\/p>\n\n\n\n
In addition to the advantage of lower capital commitment, however, there is also an increased risk, which one must be aware of. In addition to stock trading, the topic of margin trading plays an important role in futures and options trading in particular, since the purchase and sale of futures and options is always carried out on margin. In this article you will learn what margin trading means, what you should pay attention to and when trading on margin makes sense.<\/p>\n\n\n\n
Margin is a security deposit that must be deposited with the broker and the stock exchange when buying or selling shares or other securities and derivatives. The margin covers the credit risk borne by the broker.
Basically, you can think of a margin as a deposit. If you rent a vacation home, you usually have to pay a deposit. In the same way, you have to pay a margin for a trade on a margin account. If you can no longer pay the deposit, you have to leave the house. If you can no longer deposit the margin for the trade, you must leave the trade. There is then a margin call, i.e. a request for additional collateral by liquidating positions or adding funds. If this does not happen, the broker can liquidate positions. As a rule, the funds cannot be deposited quickly enough so that liquidation occurs.<\/p>\n\n\n\n
In order to enter into a securities transaction on the stock exchange, the initial margin must be deposited in a margin account. In order to be able to hold this security after the end of the regular trading period, the minimum margin (maintenance margin) must be deposited.<\/p>\n\n\n\n
The amount of the minimum margin (maintenance margin) is determined by the exchange and depends on numerous factors such as volatility, news, the value of the company and many other influencing factors. The initial margin consists of the maintenance margin and a risk premium of the broker.<\/p>\n\n\n\n
The risk premium is added on because the broker must hold the loss in the worst case - i.e. in the event of a margin call.<\/p>\n\n\n\n
Since trading on margin only requires you to deposit a fraction of the actual equivalent value of the financial instrument as collateral, this conversely means that you can trade with leverage. So a margin requirement of 25 % would mean that you can trade with a leverage of four, since you only have to deposit a quarter of the value of the underlying as margin.<\/p>\n\n\n\n
With a margin account at CapTrader you can trade stocks on margin, where the margin requirement is e.g. 15 % of the value of the stock (example purchase Apple on 10.02.22). I.e. with 10,000 euros you can theoretically trade shares worth 66,700 euros, which corresponds to a leverage of 6.7 to one.<\/p>\n\n\n\n
Sometimes there are also significantly higher margin requirements for shares, for example 87% of the value of the share (example purchase game stop on 10.02.22). This means that with 10,000 euros you can theoretically trade shares worth 11,500 euros, which corresponds to a leverage of 1.15 to one.<\/p>\n\n\n\n
In practice, it usually makes sense not to use the margin to its full extent. In any case, you should be aware of the possible risk. If you buy shares worth 11,500 Euros, as in the above example, but you only own 10,000 Euros, a loss of 13% (=1,500 USD) of the share price would result in a margin call.<\/p>\n\n\n\n
The use of a margin is particularly useful in futures and options trading, as large sums can be represented here. The deposit of a partial amount enables the use of leverage. Through the leverage, profits and losses can be potentiated. Please bear in mind that margin accounts may also be subject to margin calls, i.e. the requirement to deposit additional funds.<\/p>\n\n\n\n
The Light Sweet Crude Oil Future (symbol CL) with maturity until March 2022, has a position value of 89,500 USD on 10\/02\/22. At purchase, an initial margin of 8177 USD (9.12%) and a maintenance margin of 6541 USD (7.3%) is required.<\/p>\n\n\n\n
For options contracts, trading is possible in the margin and cash account. In the cash account, the possible maximum loss must be secured with cash or positions. (I.e. a short put must be \"cash secured\". A short call is only possible as a \"covered call\". One speaks of a covered call if, for example, one holds 100 Apple shares and writes a call. The risk is minimal here, as the 100 Apple shares can be booked out. A short sale by tendering the option is excluded with a covered call).<\/p>\n\n\n\n
In the margin account, as described above, only the deposit of a partial amount is necessary.<\/p>","protected":false},"excerpt":{"rendered":"
Die h\u00e4ufigste Art, Aktien oder andere Wertpapiere zu kaufen, besteht darin, Geld von Ihrem Bankkonto auf Ihr Brokerkonto zu \u00fcberweisen und mit diesem Geld Aktien (oder Fonds, Anleihen etc.) zu kaufen. Dar\u00fcber hinaus besteht die M\u00f6glichkeit zum Handel auf Margin, wof\u00fcr ein sogenanntes Margin Konto notwendig ist. In diesem Fall haben Sie die M\u00f6glichkeit, Geld […]<\/p>\n","protected":false},"author":7,"featured_media":0,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[86,122],"tags":[],"class_list":["post-17518","post","type-post","status-publish","format-standard","hentry","category-faq","category-margin"],"acf":{"blog_summary":"","blog_faq_schalter":"nein","faq_uberschrift":"","blog_faq_loop":null},"_links":{"self":[{"href":"https:\/\/www.captrader.com\/en\/wp-json\/wp\/v2\/posts\/17518","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.captrader.com\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.captrader.com\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.captrader.com\/en\/wp-json\/wp\/v2\/users\/7"}],"replies":[{"embeddable":true,"href":"https:\/\/www.captrader.com\/en\/wp-json\/wp\/v2\/comments?post=17518"}],"version-history":[{"count":0,"href":"https:\/\/www.captrader.com\/en\/wp-json\/wp\/v2\/posts\/17518\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.captrader.com\/en\/wp-json\/wp\/v2\/media?parent=17518"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.captrader.com\/en\/wp-json\/wp\/v2\/categories?post=17518"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.captrader.com\/en\/wp-json\/wp\/v2\/tags?post=17518"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}