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.

RELATED TERMS
  1. Liquidation Margin

    Liquidation margin is the value of all of the equity positions ...
  2. Maintenance Margin

    Maintenance margin is the minimum amount of equity that must ...
  3. Minimum Margin

    Minimum margin is the initial amount required to be deposited ...
  4. Trading Account

    1. An account similar to a traditional bank account, holding ...
  5. Cross Margining

    Cross margining is the process of offsetting positions whereby ...
  6. Margin Debt

    Margin debt is debt a brokerage customer takes on by trading ...
Related Articles
  1. Trading

    Top Reasons Forex Traders Fail

    This market can be treacherous for unprepared investors. Find out how to avoid the mistakes that keep FX traders from succeeding.
  2. Trading

    How Much Leverage Is Right for You in Forex Trades

    It isn’t economics or global finance that trip up first-time forex traders. Instead, a basic lack of knowledge on how to use leverage is at the root of trading losses.
  3. Managing Wealth

    What’s a Good Profit Margin for a New Business?

    Surprisingly, the younger your company is, the better its numbers may look.
  4. Trading

    10 Ways to Avoid Losing Money in Forex

    When approached as a business, forex trading can be profitable and rewarding. Find out what you need to do to avoid big losses as a beginner.
  5. Trading

    The Advantages of SPAN Margin

    Find out how SPAN margin gives option strategists more bang for their buck.
  6. Insights

    Margin Debt Hits all-time High: Time to Panic?

    Margin debt and equity prices: a case of the chicken or the egg?
RELATED FAQS
  1. What's the difference between a cash account and a margin account?

    All transactions in a cash account must be made with available cash or long positions; a margin account allows investors ... Read Answer >>
  2. What are my options when I get a margin call?

    Understand what a margin call means and the two primary options for meeting a margin call, such as depositing additional ... Read Answer >>
  3. What is the interest rate offered on a typical margin account?

    Learn about the basics of trading on margin accounts, specifically the rate of interest that is typically charged for margin ... Read Answer >>
  4. Do you have to sell your stocks when you get a margin call?

    Understand the implications of a margin call and what an investor's options are when the stock he purchased on margin falls ... Read Answer >>
  5. How is buying on margin regulated by the Securities and Exchange Commission (SEC)?

    Learn how FINRA and the Federal Reserve regulate margin account trading, and understand how pattern day trading can impact ... Read Answer >>
  6. 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 Answer >>
Hot Definitions
  1. Return On Equity - ROE

    The profitability returned in direct relation to shareholders' investments is called the return on equity.
  2. Working Capital

    Working capital, also known as net working capital is a measure of a company's liquidity and operational efficiency.
  3. Bond

    A bond is a fixed income investment in which an investor loans money to an entity (corporate or governmental) that borrows ...
  4. Compound Annual Growth Rate - CAGR

    The Compound Annual Growth Rate (CAGR) is the mean annual growth rate of an investment over a specified period of time longer ...
  5. Net Present Value - NPV

    Net Present Value (NPV) is the difference between the present value of cash inflows and the present value of cash outflows ...
  6. Price-Earnings Ratio - P/E Ratio

    The Price-to-Earnings Ratio or P/E ratio is a ratio for valuing a company that measures its current share price relative ...
Trading Center