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Interactive Options Course
Lesson 1 of 3
Trading stocks on margin refers to the requirements your account is subject to by your broker. Stock trading margin is typically synonymous with borrowing money from your broker in order to support your investments.
For example, to buy $100 worth of stock, an investor would typically pay $50 and borrow $50 from their broker.
Trading futures on margin is approached differently. Investors buying or selling futures contracts don’t borrow anything from a broker. Rather, a portion of the investor’s cash is set aside by their broker to act as collateral throughout the investment period.
The minimum value of the collateral is set by the exchange upon which the futures contract trades, while the broker may require additional collateral on top to guarantee the trade. Futures margin can be thought of as a cushion against potential losses in the event the market moves against the client’s position.
Cash is used to buy stocks along with a broker loan. But for other products such as futures, single stock futures and stock options, the cash set aside from a client’s account is considered a collateral amount to absorb possible losses that inevitably occur when markets move adversely.
Whether you borrow, and how much you borrow is determined by regulatory calculations your broker is subject to. Those calculations are either rules-based or risk-based.
A rules-based system involves the oversight of some governing body whose role it is to determine rules surrounding what investors may do within their accounts, and how those rules are to be applied. Such rules are applied across the board regardless of the notion of portfolio diversification. A rules-based system is generally formulaic and uses a set percentage applied to the market value.
Risk-based calculations take a broader view of an investor’s portfolio. Brokers and exchanges consider not only the individual riskiness of stocks, but also the collective risk of stocks when viewed through the lens of an entire portfolio. A risk-based is computed based on simulated worst-case scenarios. While market risk can never be diversified away, portfolio risk may be reduced through diversification across different industries and sectors as well as through long and short positions.
Since a rules-based method requires margin per position and does not benefit from portfolio diversification, margin requirements may be higher than under risk-based calculations.
The US has two regulatory regimes, each with its own governing body. The SEC oversees securities markets, while the CFTC oversees the futures market.
US Securities Margin – The US securities market is governed by the Securities and Exchange Commission or SEC. The SEC permits both risk and rules-based types of accounts.
For risk-based, brokers offer a Portfolio Margin.
US Futures margin Futures margin in the US is risk based and determined by exchanges, taking the form of collateral rather than an amount the client borrows from their broker.
The investor cannot access the collateral while the position is open.
For example, an investor bullish on the price of crude oil decides to buy an oil futures contract. One crude oil futures contract, which controls 1,000 barrels of oil, might require initial margin of $10,000. The open position is marked-to-market each day. If the value of the investment rises, the investor’s account is credited, while if the value of the futures contract falls, the account is debited to reflect the open loss.
The futures broker will take at least the minimum amount of collateral or margin as set by the futures exchange where the contract trades. The broker has the right to take more if they choose. Futures margining in the US uses a risk-based approach and is generally determined by the exchanges.
Margin Outside the US – The global regulatory regime contrasts with that of the US because all other countries rely on risk-based margining.
Interactive Brokers is headquartered in the US but offers global market access to its clients on exchanges around the world. As a US clearing broker, we are sometimes required to overlay US requirements on top of those local requirements in other countries or regions.
Outside the US there is only one regulatory regime, not one for securities and another for futures.
Contracts for Difference (CFDs) are a close proxy for stocks. However, they are treated like futures and are subject to a collateral deposit.
The following lessons will show the investor how to see the expected margin impact prior to placing a trade, find margin values for individual positions, as well as the entire portfolio. After reviewing this course, the investor will have a better understanding of margin and how to monitor on both the Trader Workstation and Mobile Trading app.
For specific platform feedback and suggestions, please submit it directly to our team using these instructions.
If you have an account-specific question or concern, please reach out to Client Services.
We encourage you to look through our FAQs before posting. Your question may already be covered!
The analysis in this material is provided for information only and is not and should not be construed as an offer to sell or the solicitation of an offer to buy any security. To the extent that this material discusses general market activity, industry or sector trends or other broad-based economic or political conditions, it should not be construed as research or investment advice. To the extent that it includes references to specific securities, commodities, currencies, or other instruments, those references do not constitute a recommendation by IBKR to buy, sell or hold such investments. This material does not and is not intended to take into account the particular financial conditions, investment objectives or requirements of individual customers. Before acting on this material, you should consider whether it is suitable for your particular circumstances and, as necessary, seek professional advice.
The views and opinions expressed herein are those of the author and do not necessarily reflect the views of Interactive Brokers, its affiliates, or its employees.
Trading on margin is only for experienced investors with high risk tolerance. You may lose more than your initial investment. For additional information regarding margin loan rates, see ibkr.com/interest
what is the margin rate for bitcoin or ethereum etfs
Hello, thank you for reaching out. Please review our margin rates and requirements on our website: https://spr.ly/CampusMarginRequirements
Let us know if you have other general questions.
How much do you charge for using margin account and for how long can I hold the stock that I buy using it?
Hello, thank you for asking. There is a minimum required deposit of 2,000 USD (or equivalent) for Margin accounts. There is no minimum required deposit to open a Cash Account at Interactive Brokers for most entities. Please view this FAQ for more information on which entities require a different minimum deposit than otherwise stated: https://www.ibkr.com/faq?id=32659392
Generally, there is no specific time limit. However, it is required that you meet the margin requirement in your account. Failure to meet these requirements will result in becoming subject to liquidation of assets to bring the account back into margin compliance. We hope this helps answer your question!
I have 530$ in my portfolio account, and when I try to buy 1 Micro contract of S&P 500 it gives me an error of insufficient funds, why?
Hello, thank you for reaching out. When you receive an “Insufficient Funds” message for a margin trade, it typically means you do not have enough cash or securities to meet the margin requirement for the trade. A few things to check:
1. Make sure you have sufficient settled cash in your account to cover the margin requirement. Cash from recent deposits or trades may take a few days to settle and become available for trading.
2. Review your account value versus margin requirement. You need to maintain a minimum equity of at least $2,000 or 100% of the margin requirement, whichever is less.
3. If trading futures or forex, check that you have met the initial margin requirement for those products. The requirement may be higher than for stocks/options.
You may need to deposit additional funds, close other positions to free up margin, or reduce your trade size to resolve the insufficient funds issue.
Please reach out with any more questions. We are here to help!
May I use Treasury Bills as collateral instead of cash?
Hello, thank you for reaching out. US T-Bills may be deposited as collateral. Please review this FAQ for more information: https://www.ibkr.com/faq?id=77064278
I note that IB pay interest on cash above US$10,000 in customer account. Does the dollar amount marked for margin for a futures trade earn interest?
Hi I am getting the error message
Error 162, reqId 3: Historical Market Data Service error message:No market data permissions for ISLAND STK. Requested market data requires additional subscription for API. See link in ‘Market Data Connections’ dialog for more details., contract: Stock(symbol=’AAPL’, exchange=’SMART’, currency=’USD’)
Please let me know which one to subscribe to resolve this message
I tried this
# request minute bars for a stock
stock = Stock(‘AAPL’, ‘SMART’, ‘USD’)
bars = ib.reqHistoricalData(
stock, endDateTime=”, durationStr=’3000 S’,
barSizeSetting=’1 min’, whatToShow=’MIDPOINT’, useRTH=True)
Hello, thank you for reaching out. If you are having difficulty with Market Data Subscriptions, I would encourage you to review our Market Data Subscriptions page, where our Popular Market Data subscriptions section discusses some options that cover this data. If you have specific questions for Market Data Subscriptions, you will need to create a Web Ticket with our market data group: https://spr.ly/IBKR_TicketCampus
Can I borrow in CHF
Hello, thank you for asking. The Swiss Franc is supported on IBKR’s platform. Please review our available Products and Exchanges on our webpage: https://spr.ly/IBKR_ProductsExchangesCampus
Does the dollar amount marked for margin for a futures trade earn interest?
Hello, thank you for reaching out. IBKR pays interest on settled cash. Click here for more information: https://spr.ly/IBKR_InterestProgramCampus
Good afternoon, my question before creating an account and starting to operate is that I see that putting in the margin account can lose more than your initial investment. What does it mean? If I deposit 10,000 euros, I understand that the maximum I can lose if they liquidate me is those 10,000 euros. I will never acquire a debt with the broker, correct?
Hello, thank you for asking. In a Margin account, you can lose more than your initial investment. A margin account allows you to borrow funds from your brokerage firm to purchase securities. The borrowed amount is called a margin loan. If the value of your account falls below the margin requirement, it can result in a real time liquidation. The value of the securities sold may not be enough to cover the margin loan, which can result in a loss greater than your initial investment.
Dear Team,
I am trading using margin in IBKR platform, In my trade records, the losses are reflected as USD 614 and USD 183, respectively. However, when I reviewed my Realized P&L report, the losses are stated as USD 969 and USD 481 for the same dates.
Could you please provide a clear explanation for this discrepancy? Specifically, I would appreciate it if you could describe any additional fees or hidden charges that contributed to the increased losses.
Hello Afsal, thank you for reaching out. For an account-specific inquiry like this, we recommend contacting Client Services: https://spr.ly/IBKR_ClientServicesCampus
Hi, What is the current (i.e. as on 06 Sep 2024 ) interest rate that is applied by IBKR on the amount extended as margin funding?
Hello, thank you for reaching out. Please view this webpage: https://www.interactivebrokers.com/en/trading/margin-rates.php
Hi, I traded 1 contract of the S&P500 E-mini, where both the initial and maintenance margin was around 2000. However, under Balances, the initial margin stated was 200,000.
Could you help explain why this is the case?
Hello, thank you for reaching out. Please view this User Guide for more information on Margin Requirements: https://www.ibkrguides.com/advisorportal/homemenu/marginrequirements.htm
If you are experiencing a time sensitive trading issue, we recommend contacting Client Services: https://spr.ly/IBKR_ClientServicesCampus
Please reach back out with any additional questions. We are here to help!
Can I sell naked puts and what is the margin requirement
Thank you for reaching out. Yes and you can take a look at our Margin Rates and Requirements on our webpage: https://spr.ly/CampusMarginRequirements
I have few stock positions in my account. And I paid full amount from my cash account. (I don’t borrow any from broker). why IBKR is keeping fair amount of my cash as Margin? I understand Margin is usually for trading when I borrow money from broker or so. Thanks.
Hello, thank you for reaching out. Cash accounts typically do not have margin requirements in the same way margin accounts do. Please view this FAQ for information on why margin requirements are shown in a cash account: https://www.interactivebrokers.com/faq?id=699745671
We hope this information is helpful!
Can I keep the positions overnight or for long period using margin or I am only allowed to use margin for day trading and need to sell it same day
Hello, thank you for reaching out. Margin accounts are eligible for overnight trading.
Please view these FAQs for more information about what account types are eligible and the products that are available: https://www.interactivebrokers.com/faq?id=377200966
https://www.interactivebrokers.com/faq?id=377201119
We hope this helps!
Hi there, I would like to know how do I purchase stocks only with my “Settled Cash” balance and not use margin in my margin IBKR account. Before I switched to the margin account, my cash account will give me a notification that I have insufficient funds to execute a trade. However, after switching to a margin account, this notification/warning doesn’t appear. Is there a way for me to change the settings in the margin account to only trade using my settled cash balance? Thank you.
Hello, In TWS I am seeing a financing cost associated with opening a LONG position in london spot gold. Why is that? I thought only short position are subjec to financing (borrowing) costs. thanks
Thank you for contacting IBKR on IBKR Campus. To address your concern/inquiry, we need a few more details about the situation and your account; unfortunately, social media is not a secure channel to share this information. We kindly ask that you contact our Client Services team for further assistance via web ticket, live chat, or phone call using the link below. We appreciate your understanding.https://spr.ly/IBKR_ClientServicesCampus
is it possible to do leverage trading in stocks/precious metals and commodities? please share a link to it
Hello, thank you for reaching out. You can view the margin requirements to trade precious metals and commodities here: https://spr.ly/CampusMarginRequirements
The base currency in my IBKR margin account is the euro. However, I only trade the american exchanges in dollars. I seem to be incurring conversion charges from euro to dollar. Could I change my base currency to dollars, and would this eliminate these conversion charges? Also, would this eliminate the margin loan, as I have sufficient funds to cover it.
Hello Thomas, thank you for reaching out. Base currency changes solely effect the reporting in Client Portal. A margin loan is created by borrowing funds in your margin account. If you do not want margin loans, you can convert currencies before trading and maintain a positive aggregate cash balance in the account. Even with a positive cash balance, be aware that a loan may still exist due to balance netting or timing differences. For more instructions to convert currencies, please view: https://www.interactivebrokers.com/faq?id=111454768
We hope this helps!
Can I use margin account for day trading using unsettled funds? What I mean is that when I buy and sell a security the settlement happens at T+1 or T+2 day. But can I use those funds to buy and sell another security the same day? Can I take multiple rounds of buy and sell using same unsettled funds? This is necessary for day trading as I would need to use the funds for multiple trades (with a very small gain) the same day ?
can I day trade US stocks in IBKR from Canada with a small account. is pdt restirictions are on small a day trading in ca by ibkr or not
Hello, thank you for reaching out and we apologize for the delayed response. Yes, with the correct trading permissions, it should be possible to trade US stocks in Canada. You can view and manage your trading permissions anytime in Client Portal: https://spr.ly/IBKR_TradingPermissions
To trade certain products or in specific regions, you’ll need to request permissions. These are based on your financial profile (e.g., age, experience, net worth, objectives) and sometimes your location. Please note we can’t share the exact requirements for each permission.
A Pattern Day Trader is someone who has an IBKR Lite or Pro margin account and who affects 4 or more “day trades” within a 5 business day period. If your margin account is over USD 25,000 then you are not affected by being a Pattern Day Trader. If your margin account is under USD 25,000 then you are limited to 3 “day trades” in a rolling 5 business day period, but if you use all 3 “day trades” then your account is flagged as a “Potential Pattern Day Trader”. You can read more here: https://www.ibkrguides.com/kb/pattern-day-trader-account.htm
We hope this helps!
We hope this information is helpful!
Hello, I’d like to ask you for clarification regarding leverage: is the amount I can borrow linked solely to liquid assets or also to open positions? For example, if I have an open position and I want to open a second position, does the amount I can borrow depend solely on my cash or does the value of the position already opened also count? Thank you in advance, Sincerely
Hello, thank you for reaching out. For more information about how much you can borrow on your securities, please review: https://www.interactivebrokers.com/faq?id=47453002
We hope this information is helpful!
Hello, If I already have an open position and I want to open a new position, does the amount I can borrow with leverage also take into account the value of the open position? Thank you
Hello, thank you for asking. Please view how the available funds for a margin account are calculated: https://www.interactivebrokers.com/faq?id=699747472
We hope this helps!
Does funds on hold count towards your margin requirement?
Hi Carl, thank you for reaching out. Please view how IBKR calculates Margin Requirements here: https://www.interactivebrokers.com/faq?id=691853091
We hope this information is helpful!
I have a IBKR Lite margin account with $1000 balance . When I try to place a trade it is rejected saying it would lead to a Reg T Call. Why does this happen?
Hi, IBKR Team. I have a Margin Account with 23,900eur NLV. I need additional 30,000eur to trade US stocks. How much interest i have to pay?
Hello, thank you for reaching out. Clients can receive interest on settled positive cash balances. The interest rate is dependent on several factors such as your IBKR pricing structure (Pro versus Lite), the overall value of your account, and currency. Please use the calculator on the webpage to see what interest rate you might earn: https://spr.ly/IBKR_InterestProgramCampus
Please note that interest will not be payable on the first USD 10,000 (or the equivalent value in other currencies) of uninvested cash balances. IBKR accrues interest daily and posts actual interest monthly on the third business day of the following month on the Activity Statement under the NAV section. We hope this helps!
Hi, I am planning to borrow cash for my personal use (wedding, furniture..). What type of Margin account is needed for this. I have stocks and I am willing to use these stocks to borrow money. Can you please share details
Hello, thank you for reaching out. We appreciate your interest in opening an account! To get started: https://spr.ly/OpenAccountfromIBKRCampus
To learn more about the available account types based on your region of residency, please review this link: https://spr.ly/Configurecampus
To establish a margin loan: https://www.interactivebrokers.com/faq?id=30131374
We hope this information is helpful!
Hi there, I would like to ask if I can place an order using a leverage to buy US treasury bonds without using all my funds and mostly borrowing money and using some of my margin ?
Hi Cheryl, thank you for reaching out. US T-Bills may be deposited as collateral, but we require a minimum of $1,000,000 in US T-Bills for a transfer.
To initiate a US T-Bill transfer, please see: https://www.interactivebrokers.com/faq?id=41562848
For more information, please review: https://www.interactivebrokers.com/faq?id=77064278
Hi there, I want to activate margin on my account, how much I can take for my account of $5,000? Can I lose all of my money if my based $5,000 below under 25% ?
Hi, thank you for reaching out. The minimum deposit required to open a margin account is USD 2,000 or the non-USD equivalent for IBLLC clients. https://www.interactivebrokers.com/faq?id=32659392
For instructions to convert your account from a Cash account to a Margin account, please view: https://www.interactivebrokers.com/faq?id=27271540
Maintenance Margin is the amount of funds which must be maintained in order to continue holding a position. In the U.S., the rules of the listing exchanges specify the maintenance margin requirements on security transactions subject to SEC approval. The exchange minimum maintenance margin requirement for long stock positions is currently set at 25% although brokers can add any amount of a ‘house margin’ requirement in excess of that, particularly where the security is considered low-priced or subject to volatile price changes. The exchange minimum maintenance margin requirement for short stock positions is currently set at 30%. You can monitor your margin values in real time using your TWS/Mosaic Account Window. For more information, please review: https://www.interactivebrokers.com/faq?id=41550647
Any open position can be closed by the IBKR Liquidation system when an account is in a margin deficit. Please review this figures you should review to ensure avoiding a liquidation: https://www.interactivebrokers.com/faq?id=34492191
You can use the Stock Margin Calculator to calculate your approximate available margin for stocks and ETFs: https://www.interactivebrokers.com/en/trading/margin-calculator.php
We hope this helps answer your question!
Are Croatian accounts carried by IBKR Central Europe and is it under Pattern day trader rule?