• English
• 中文繁体
• 中文简体
Hi,
moomoo ID:0
Log Out

# Margin ratio

## 1. What is the margin ratio?

The margin ratio represents the reciprocal of the leverage in margin trading.

Take long margin ratios as an example, If you want to buy a stock with a market value of 1 million US dollars, when the initial margin ratio of the stock is 100%, you will need 1 million US dollars to open a position (corresponding to the leverage of 1x); when the initial margin ratio is 80%, it will only take 800,000 US dollars to open the same position (corresponding to the leverage of 1.25x).

Take short margin ratios as an example, If you want to sell short a stock with a market value of 1 million US dollars when the initial margin ratio of the stock is 100%, you will need 1 million US dollars in your account; when the initial margin ratio is 80%, only 800,000 US dollars are needed to sell short the same position.

## 2. How will the margin ratio adjustment influence my accounts?

Generally speaking, if the margin ratio is reduced, the funds required to open a position are lower, and the stock position can pledge more buying power for trading, IPO subscription, etc. If the margin ratio is increased, then more funds are required to open a position, while less or no buying power can be pledged.

For example, if the initial margin ratio of a stock is increased from 60% to 80%:

2.1 If you hold a stock postion with a market value of 1 million, the initial margin requirement will increase from 600,000 to 800,000;

2.2 If you hold a stock postion with a market value of 1 million, the amount that can be pledged will be reduced from 400,000 to 200,000.

## 3. How to check the margin ratio?

You can click the icons of "Long Margin" or "Short Margin"  to view its margin ratio.

## 4. How to calculate the margin requirement for each stock?

Initial Margin Requirement = Market Value of Underlying Stock * Its Initial Margin Ratio

Margin Call Margin Requirement = Market Value of Underlying Stock * Its Margin Call Margin Ratio

Maintenance Margin Requirement = Market Value of Underlying Stock * Its Maintenance Margin Ratio

For example, if you hold 1 million HKD of Tencent (00700.HK), and the initial margin ratio is 50%, then the initial margin requirement = the market value of the underlying stock * the initial margin ratio = 1 million HKD * 50% = 500,000 HKD.

The total required margin of the account is equal to the summary of the margin requirement of each stock position.