 # How Is Stock Market Margin Calculated?

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To calculate the margin required for a long stock purchase, multiply the number of shares by the price by the margin rate.

The margin requirement for a short sale is the margin requirement plus 100% of the value of the security.

## What is stock margin?

Buying on margin involves borrowing money from a broker to purchase stock. A margin account increases your purchasing power and allows you to use someone else’s money to increase financial leverage. The value of the stock serves as collateral for the loan he has given you.

## How do you calculate margin?

First, find your gross profit, or the difference between the revenue (\$200) and the cost (\$150). To find the margin, divide gross profit by the revenue. To make the margin a percentage, multiply the result by 100. The margin is 25%.

## How do you calculate remaining margin?

To calculate it, subtract your margin requirement from your collateral balance. For example, suppose you want to short 100 shares of Corp. X, currently selling at \$20 a share. If your broker requires 150 percent margin, your minimum collateral is 1.5 times \$20 times 100 shares, or \$3,000.