What is maintenance?

Maintenance is a minimum amount of equity that needs to be held on the edge to make the account open. Many investors buy and sell shares on a margin because this practice increases their purchasing power, but buying on a margin can also expose people significant risks. Maintenance requirements are designed to reduce the risk and prevent losses for both parties: an investor and a brokerage company. People usually have to provide a minimum margin in front of the trade, which means they store the basic amount only to open the margin account. When they first buy securities, they are obliged to build an initial range, which is often 50% of value. In order to maintain open margins to make the purchase and sale open, maintenance must be maintained.

Government regulatory bodies often set maintenance at 25%, although individual brokers may decide to increase the margin. This means that as the value of someone's securities decreases, it can get a "call to margin", and the broker demands more money on POKengraving of maintenance. If the investor does not respond to a margin call, the broker may decide to dispose of his securities to solve the problem. Investors may also decide to get rid of their shares rather than covering the margin, which can further reduce prices if many investors receive margins.

maintenance requirements may vary depending on the securities that someone buys and sells and the preferences of the broker. The conditions are clearly determined in a contract that is signed when someone opens an account, and investors can always contact their brokers to see how much their maintenance is on any Given time. People are also welcome to exceed the requirements if they want it.

margin trading can certainly increase the investor's position by stronger by allowing it to allow more economic strength. However, this can also be very dangerous, as radical shifts in values ​​could leave investors to try to cover their margins. Brokers must consider the desire to make accounts available on the edge to attractEven clients with the need to protect themselves from losses.