- 1). Check the requirements for a margin account. Some companies allow you to open a margin account if your balance is as low a $2000 or 100 percent of the purchase price of the stocks. This is the minimum amount the Financial Industry Regulatory Authority (FINRA) deems necessary to make your brokerage account a margin account. However, many companies require a larger balance in your account. If you plan to do day trading, buying and selling a stock within the same trading day the FINRA minimum deposit is $25,000.
- 2). Understand that not all accounts are eligible for margin accounts. IRAs and other retirement plans have special rules, but , you can't borrow cash from them. Accounts for minors such as UTMA, Coverdale, UGMA and Minor IRAs can't be margin accounts. Not all assets in your brokerage accounts are eligible. You normally can use most stocks on the NYSE, those on AMEX or NASDAQ, a few over the counter stocks approved by the Federal Reserve Board and specified corporate, government or municipal bonds. If you have an account that's all penny stocks, chances are most of them aren't eligible.
- 3). Borrow up to 50 percent of the value of the account but be aware of the house maintenance if the stock prices drop. The house maintenance amount is the minimum percentage of equity in the account. If you own $100,000 in eligible stocks, the value of the account less the loan must be at least $25,000 to meet FINRA minimums. Some brokerage accounts have higher minimums. If the stocks drop in price then you're subject to a margin call and must have money to cover the difference.
- 4). Read the brokerage agreement. Even if you qualify for a margin account, the rates of interest vary. Check the rate of the loan and make sure you have more than enough money in the event the market drops. If your stock prices drop and the loan becomes a higher percentage of your equity, you're could be subject to a margin call. That means the company can sell any stock they want to pay back your loan. The company can also increase the house maintenance amount, the minimum percent of equity in the account.
- 5). Request a loan. In most cases, you linked a checking account to your brokerage account. You can either request the funds transfer to your checking account or have the company send you a check. The fastest method is normally a transfer to the checking account associated with your brokerage account.
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