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Margin Account

Market Mechanics

A margin account lets you borrow from your broker against the securities in your account, and you pay interest on the loan.

In the US you can generally borrow up to half of a purchase at the outset, and your equity in the account must stay above a maintenance level (at least 25% under the rules, and brokers often require more). If it falls below that, the broker issues a margin call for more collateral, and if you do not meet it, it can sell your positions for you.

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