Margin Trading

Margin Trading

Margin Trading Overview

Benefits of a Margin Trading Account

Leverage Assets

Use the cash or securities in your brokerage account as leverage to increase your buying power.

Access Funds

Get the lowest market margin loan interest rates of any broker.1

Enable Account for Short Selling

Diversify trading strategies with short selling, options and futures contracts, or currency trading.

Get a Line of Credit

Borrow against a margin account at any time and repay the loan on your own schedule.

Understand the Risks of Margin Trading

Margin borrowing is only for experienced investors with high risk tolerance.
 You may lose more than your initial investment.

Before trading on margin, understand the following risks

  • Trading losses may be greater than the value of the initial investment
  • Leveraged investments create a greater potential risk of loss
  • Additional costs from margin interest charges
  • Potential margin calls or liquidation of securities

How Trading Securities on Margin Works

Rules-based Margin

Margin models determine the type of brokerage accounts you open and the type of financial instruments you may trade.

  • In rules-based margin systems, your margin obligations are calculated by a defined formula and applied to each marginable product. This is the more common type of margin strategy used by securities traders.
Example profit / loss on stock trade using margin
Example profit / loss on stock trade using margin: Bought 100
 shares @ $40 (50 shares with cash and 50 shares on margin)

Rated Lowest Margin Fees1 by StockBrokers.com

US Margin Loan Rates Comparison2

USD 25K USD 300K USD 1.5M USD 3.5M
Interactive Brokers 6.08% 5.75% 5.53% 5.42%
E-Trade 12.95% 11.45% N/A N/A
Fidelity* 12.33% 11.08% 8.50% 8.50%
Schwab 12.33% 11.08% N/A N/A
Vanguard 12.50% 11.00% N/A N/A

Each firm's information reflects the standard online margin loan rates obtained from their respective websites. Competitor rates and offers subject to change without notice. Services vary by firm.

*Rates applicable only to Fidelity Brokerage Services LLC retail clients.

View Margin Rate Details

Margin Education Course on Traders' Academy

Introduction to Margin Trading

This course is designed to help investors understand margin basics, including different types of margin accounts, margining methods, and margin requirements, plus how to monitor margin on both Trader Workstation (TWS) and IBKR Mobile.

Trading on margin is only for sophisticated traders. You may lose more than your initial investment.

  • Introduction to Margin
  • Monitoring Margin in Trader Workstation (TWS)
  • Looking at Margin on IBKR Mobile
Take Introduction to Margin Trading
Introduction to Margin
Futures trading at IBKR

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Disclosures

  1. According to StockBrokers.com Interactive Brokers Review: Read the full article Online Broker Reviews, May 6, 2024. "Professionals can take advantage of industry-leading commissions, including the lowest margin rates across all balance tiers."
  2. Annual Percentage Rate (APR) on USD margin loan balances as of November 11, 2024. Interactive Brokers calculates the interest charged on margin loans using the applicable rates for each interest rate tier listed on its website. Learn more about margin loan rates.

Interactive Brokers Canada Inc. is a member of the Canadian Investment Regulatory Organization (CIRO) and Member - Canadian Investor Protection Fund. Know Your Advisor: View the CIRO AdvisorReport. Trading of securities and derivatives may involve a high degree of risk and investors should be prepared for the risk of losing their entire investment and losing further amounts. Using borrowed money to finance the purchase of securities involves greater risk than using cash resources only. If you borrow money to purchase securities, your responsibility to repay the loan and pay interest as required by its terms remains the same even if the value of the securities purchased declines. Interactive Brokers Canada Inc. is an order execution-only dealer and does not provide investment advice or recommendations regarding the purchase or sale of any securities or derivatives. Our registered office is located at 1800 McGill College Avenue, Suite 2106, Montreal, Quebec, H3A 3J6, Canada.


Know Your Advisor: View the CIRO AdvisorReport