Core terms
Margin account
A brokerage account in which the firm may lend you money against your securities, subject to the Federal Reserve's Regulation T, FINRA Rule 4210 and the broker's own, often stricter, house rules.
In a cash account you can only spend settled cash. In a margin account the broker can lend part of the purchase price, which raises buying power and also lets you sell short. Regulation T generally sets the initial margin for stock purchases at 50%; FINRA Rule 4210 sets maintenance requirements, generally 25% of the long market value; brokers can and often do require more, especially for volatile or low-priced stocks.
If the account's equity falls below the requirement, the broker issues a margin call and can sell positions without asking. Since June 4, 2026, FINRA's intraday margin standards apply to day trading in margin accounts instead of the old pattern day trader rules.
What traders should verify
Learn your broker's house requirements for small caps; many set 100% margin, meaning no loan, on low-priced or volatile stocks.
Do not conflate
Borrowing magnifies losses as well as gains, and losses can exceed the account's value on a short or a gap.