Margin Requirement is a concept related to the minimum amount in collateral that the issuer of a financial security requests from the buyer, to hedge against the risk of adverse price movements or the buyer defaulting. The reason for this is pretty simple: there is no point in buying something on credit when it could turn out to be a bad decision later. But how do you find out what margin requirement actually means?Let's take an example. You are investing solely in stocks and want to make sure you have enough money set aside to cover any losses that might occur over time. Let's say you decide on $1000 as your investment and want to buy 10 stocks at once. When you look up online, you see that each stock requires $100 as margin, before deciding whether or why it's worth buying or not. From now onwards, whenever you invest $1000, know that about 20% will go towards collaterals for every single stock chosen.Margin Requirement is a financial concept related to the minimum amount in collateral that the issuer of a financial security requests from the buyer, to hedge against the risk of adverse price movements or the buyer defaulting. This requirement is usually put on shares or stocks and can be linked with how much individuals are willing to put forward towards their investments, for example, if an investor has some money invested in stocks but wants to expand it further then they would ask for some more margin as well.
