Margin Guide

Getting Started with Margin

Margin borrowing at Firstrade

Borrowing on margin involves investing in securities with cash borrowed from Firstrade, using securities as collateral. Investing through margin loans has the effect of magnifying any profit or loss made on the investments.

The securities serve as collateral for the loan. The net value, i.e. the difference between the total value of the securities and the loan, is initially equal to the amount of one's own cash used. This difference has to stay above a minimum margin requirement, the purpose of which is to protect the broker against a fall in the value of the securities to the point that the investor can no longer cover the loan.

The investor needs to pay interest on the loan. Firstrade offers low margin interest rates that vary according to your account balance. You do not need to pay any interest if you have a margin account but do not borrow from Firstrade.

How do I start investing on margin at Firstrade?

Here's how to start investing on margin, following the steps below:

  • STEP 1: Make sure you understand the risks and benefits of using margin.
  • STEP 2: Have at least $2,000 of assets in your account.
  • STEP 3: Complete the Margin Application & Agreement and send it to Firstrade by fax, email or mail.
  • STEP 4: Once your margin account is approved, you can start enjoying the benefits and flexibility of margin borrowing.

According to the margin requirements of the marginable securities you hold or wish to buy, you may get a margin buying power up to twice as much as your own equity (when the initial margin requirement is 50%). Margin requirement calculations are illustrated in the margin requirement section.