Portfolio margin.
In plain English
Portfolio margin is a sophisticated way of calculating how much you can borrow in a margin account. Instead of the standard fixed percentages applied position by position, it uses risk models to assess the whole portfolio, recognizing that hedged positions offset each other. For experienced traders with complex, balanced holdings, this can free up far more buying power. That extra leverage cuts both ways: losses and margin calls can be much larger and faster, so brokers restrict portfolio margin to approved accounts meeting high minimums, often 100,000 dollars or more. It is a tool for advanced traders, not beginners.
01Why it matters
Portfolio margin unlocks much greater leverage than standard rules, which magnifies both gains and the risk of a large, fast margin call, so understanding it clarifies why it is limited to experienced accounts.
02The math, step by step
A trader with hedged positions gets far more buying power under portfolio margin than standard rules would allow. The extra leverage boosts potential gains, but a sharp move against the portfolio can trigger a large margin call quickly.
03What this is NOT
Portfolio margin is NOT safer than standard margin. By allowing more leverage, it increases the size and speed of potential losses and margin calls, which is why it is limited to high-minimum, approved accounts.
04Receipts
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Plain-English answers from our glossary. Receipts included. Never advice.
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