Comprehensive Guide
Learn more in our Investing Guide.
How it works
Buying on margin borrows against your portfolio to enlarge positions, and the loan converts ordinary market dips into potential forced liquidations. The geometry is fixed: your equity is portfolio value minus the loan, and brokers demand equity stay above a maintenance fraction of value — 25% is the regulatory floor, though house requirements commonly run 30–40% and higher for volatile names. This calculator solves the trigger directly: with $20,000 of equity against a $20,000 loan at a 30% requirement, a fall of about 28.6% puts value at $28,571, equity at exactly 30%, and a call arrives — a $5,714 deposit restores your original 50% cushion, or shares get sold automatically at whatever prices prevail. The status table walks equity down through successive 5% drops so the approach is visible rather than discovered. Three dynamics make real calls nastier than the static math. Margin interest accrues daily against the loan, eroding equity even in flat markets. Overnight gaps skip straight through buffers — the call can print below the theoretical level. And concentrated portfolios face elevated tiered requirements precisely when volatility spikes, tightening the corridor exactly when it matters. Leverage is a duration bet on calm; this page measures the runway.Formula
Trigger value = loan ÷ (1 − requirement%) | Max drop = 1 − trigger value ÷ current value | Equity ratio = (value − loan) ÷ value
Tips
- Use your broker's actual house requirement — it exceeds the 25% regulatory minimum.
- Set alerts well inside the buffer; a call at 31% equity gives hours, not weeks.
- Pre-position the rescue cash or a trim plan before borrowing, not after.
- Remember interest: daily accrual pulls the trigger closer every month you carry the loan.
- Concentrated books get tiered requirements — check per-position schedules, not just account-level.
Frequently asked questions
How far can my portfolio fall before a margin call?
Solve loan divided by one minus the requirement, then compare with today's value. With equal equity and debt ($20k/$20k) and a 30% requirement, the trigger sits about 28.6% below entry — at higher leverage the buffer shrinks toward single digits quickly.
What is the minimum maintenance requirement for margin?
FINRA sets 25% of current market value as the floor, but brokers impose house requirements of 30–40% or more, with elevated tiers for concentrated or volatile positions. Your effective buffer uses the house number, which can also change without notice during turbulent markets.
What happens when I get a margin call?
You must deposit cash, add approved collateral, or sell positions within the broker's deadline — often as little as two or three business days. Do nothing and the broker liquidates holdings of its choosing at prevailing prices, frequently the worst moments of a selloff.
Can a margin call happen overnight?
Yes — gaps through earnings, halts and weekend news skip intermediate prices entirely. A stock can open below your theoretical trigger, meaning liquidation occurs at prices worse than any table showed, which is why stops placed inside the buffer matter more than trigger calculations alone.
How much margin is safe for a long-term investor?
Conservative practice keeps borrowed amounts small relative to equity — many practitioners cap loans near 10–20% of portfolio value, preserving buffers deep enough to survive historical bear-market magnitudes plus interest drag without ever approaching maintenance territory. Anything beyond that turns routine volatility into an exit decision you don't control.