Buying on Margin

See how leverage amplifies investor gains AND losses

Input Parameters

Position Setup

Number of Shares: Price per Share (Time 0):

Margin Requirements

Initial Margin (%): Maintenance Margin (%):

Price Change

Price per Share (Time 1):

Time 0 — Initial Position

Equity

$6,000

Borrowed

$4,000

Total Investment

$10,000

100

Price/Share

$100

Initial Margin

60%

Margin = Equity / Total Value

Time 1 — After Price Change

Equity

N/A

Borrowed

N/A

Total Value

N/A

100

Price/Share

N/A

Margin

N/A

Margin = Equity / Total Value

Rate of Return (if liquidated)

N/A

Return = (P₁ − P₀) × Shares / Equity₀

⚠️ Margin Call Warning!

The margin has dropped below typical maintenance requirements (usually 25-30%). The broker requires the investor to deposit additional funds to maintain the position.