Trading Margin Excess

DEFINITION of 'Trading Margin Excess'

The funds that remain in a margin trading account that are available to use towards the purchase of a new position or the increase of an existing position. Traders and investors often take advantage of margin accounts that provide a leveraged amount of funds with which to trade or invest.

BREAKING DOWN 'Trading Margin Excess'

A margin account allows traders or investors the ability to purchase beyond the actual cash value of the account by utilizing leverage. For instance, a trader could have $10,000 cash in a trading account and be able to trade a value of $100,000 with a 10:1 leverage. The trading margin excess is the funding that is currently available to trade with. While margin allows traders and investors the opportunity to profit, caution must be used due to the potential to sustain catastrophic losses.

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RELATED FAQS
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    Find out why it is important for traders to understand the difference between initial margin requirements and maintenance ... Read Answer >>
  3. What's the difference between a cash account and a margin account?

    Compare and contrast margin and cash accounts. Margin accounts offer short-term loans, leverage on existing portfolios, and ... Read Answer >>
  4. Margin accounts are established to allow investors the ability to use leverage with ...

    The correct answer is a): A margin account allows you to buy additional securities by leveraging the value of your eligible ... Read Answer >>
  5. What does it mean when I get a maintenance margin call?

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