01
Initial Margin: Reg T and 2:1
Regulation T sets initial margin on marginable equities at 50 percent, which is the origin of the familiar 2:1 overnight buying power: deposit $50,000 and you can hold roughly $100,000 in marginable stock. Pattern day traders who meet the $25,000 equity requirement get 4:1 intraday buying power on top of that, but the 4:1 is intraday only and must be reduced to 2:1 before the close.
Not everything is marginable. Low-priced stocks, many recent IPOs, and names the firm has flagged as volatile often carry 100 percent requirements, meaning they consume buying power dollar for dollar. Those designations change without notice, sometimes mid-session on a mover.
Options and futures work under entirely different frameworks. Do not carry over equity intuitions to a portfolio margin or futures account, where requirements are risk-based and can change intraday with volatility.
02
Maintenance Margin and House Requirements
Maintenance margin is the minimum equity you must keep in the account as a percentage of the position's market value. FINRA sets a 25 percent floor for long equity positions and 30 percent for most shorts, but that floor is the regulatory minimum, not what your firm will actually apply.
House requirements are higher and are the number that governs your account. Concentrated positions, hard-to-borrow shorts, low-float names, and stocks with earnings or a pending catalyst frequently carry 50 to 100 percent house requirements. A firm can raise the requirement on a name you already hold, which converts a comfortable position into a call without the price moving at all.
The arithmetic worth internalizing: at a 25 percent maintenance requirement, a fully margined long position gets a call after roughly a 33 percent adverse move. At a 50 percent house requirement, that cushion shrinks dramatically. Leverage does not just amplify losses, it shortens the distance to forced selling.
03
Margin Calls, Liquidations, and Deadlines
A maintenance call is resolved by depositing cash, depositing marginable securities, or closing positions. Firms usually give a short window — often a few business days — but they reserve the right to liquidate immediately without notice when risk warrants, and in a fast market they use it.
You do not choose which positions get liquidated. The risk desk does, and it will usually sell what is most liquid or most offensive to the requirement, which may be your best position rather than the one causing the problem.
Day-trading buying power calls are separate and stricter: exceed your day-trading buying power and the account can be restricted to cash-available-for-withdrawal basis for 90 days. Free-riding violations in cash accounts trigger similar restrictions. These are administrative penalties, not judgments about whether you were right.
04
Using Margin Without Getting Run Over
Treat maximum buying power as a technical limit, not a target. If your normal position size uses most of your available margin, you have no capacity to absorb a routine drawdown and no ability to add to a position that goes your way.
Know the house requirement on anything concentrated or volatile before you size it, and assume it can be raised. Ask your broker directly; the numbers are published but rarely prominent.
And keep the interest cost in view. Margin loan rates are quoted in tiers and compound daily on overnight balances. For an intraday trader the cost is negligible; for anyone carrying leveraged positions for weeks, it is a real drag that has to be beaten before you make anything.