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.

  1. Margin

    1. Borrowed money that is used to purchase securities. This practice ...
  2. Buying Power

    The money an investor has available to buy securities. In a margin ...
  3. Margin Account

    A brokerage account in which the broker lends the customer cash ...
  4. Leverage

    1. The use of various financial instruments or borrowed capital, ...
  5. Initial Margin

    The percentage of the purchase price of securities (that can ...
  6. Maintenance Margin

    The minimum amount of equity that must be maintained in a margin ...
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  1. What is a margin account?

    A margin account is an account offered by brokerages that allows investors to borrow money to buy securities. An investor ... Read Full Answer >>
  2. How is margin interest calculated?

    Before running a calculation you must first find out what rate your broker-dealer is charging to borrow money. The broker ... Read Full Answer >>
  3. Why do you need a margin account to short sell stocks?

    The reason that margin accounts and only margin accounts can be used to short sell stocks has to do with Regulation T, a ... Read Full Answer >>
  4. How do hedge funds use equity options?

    With the growth in the size and number of hedge funds over the past decade, the interest in how these funds go about generating ... Read Full Answer >>
  5. What does a futures contract cost?

    The value of a futures contract is derived from the cash value of the underlying asset. While a futures contract may have ... Read Full Answer >>
  6. How does a broker decide which customers are eligible to open a margin account?

    Brokers have the sole discretion to determine which customers may open margin accounts with them, although there are regulations ... Read Full Answer >>

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