Due to strict regulation in the US, margin is limited to leverage of four to one (4-1) intraday. and two to one (2-1) overnight; when the exchange is closed.
Overnight Margin, 2 to 1.
Example – if a customer has $10,000 in his account, he can hold securities valued at $20,000.
Note: Only shares above $5 are eligible for margin.
Intraday Margin, 4 to 1.
Example – if a customer has $10,000 in his account, he can hold securities valued at $40,000.
Note: The account only gets leverage of 2 to 1 overnight. Which means if a customer has $40,000 in holdings in the account intraday, he will have to sell holdings worth $20,000 before the end of the trading day. so as not to get a Margin Call.
Overnight leverage will be charged 1% interest per month.
Example – if a customer has $10,000 in an account, and holds shares valued at $20,000, the client will pay interest of 1% on the money that is leveraged.
Calculation Example: $10,000 * 1% = $100 divided by 31 days = $3.22 per day.
Intraday Margin is free. Intraday margin is 4 to 1 and the customer does not pay interest on Intraday margin.
If the account holds shares worth more than the permitted margin. The customer will receive a margin call. Account will be required to wire funds to cover the margin call. If account does not cover its margin call, the account will be blocked for 30 days, except for withdrawals.