Definition: Maintenance margin refers to the minimum amount of equity that a trader must maintain in their margin account after initiating a leveraged position. It is set by brokers and regulatory bodies to ensure that traders have sufficient funds to cover potential losses. If the account equity falls below this level, a margin call is triggered, requiring the trader to deposit additional funds or close positions to meet the margin requirements.
Understanding and managing maintenance margin is crucial for successful leveraged trading, helping traders maintain financial stability, manage risk, and avoid margin calls and forced liquidations.
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