Margin Trading

What is Margin Trading?

There are two margin definitions. The term Securities margin refers to borrowing money to purchase stock. However, commodities margin involves putting in your own cash as collateral for the contract.

View Infographic

Benefits of a Margin Trading Account

Leverage Assets

Use the cash or securities in your brokerage account as leverage to increase your buying power.

Access Funds

Get the lowest market margin loan interest rates of any broker.1

Enable Account for Short Selling

Diversify trading strategies with short selling, options and futures contracts, or currency trading.

Get a Line of Credit

Borrow against a margin account at any time and repay the loan on your own schedule.

Understand the Risks of Margin Trading

Margin borrowing is only for experienced investors with high risk tolerance.
You may lose more than your initial investment.

Before trading on margin, understand the following risks

  • Trading losses may be greater than the value of the initial investment
  • Leveraged investments create a greater potential risk of loss
  • Additional costs from margin interest charges
  • Potential margin calls or liquidation of securities

How Trading Securities on Margin Works

Rules-based vs. Risk-based Margin

Margin models determine the type of brokerage accounts you open and the type of financial instruments you may trade. Trading on margin uses two key methodologies: rules-based and risk-based margin.

  • In rules-based margin systems, your margin obligations are calculated by a defined formula and applied to each marginable product. This is the more common type of margin strategy used by securities traders.
  • In risk-based margin systems, margin calculations are based on the risk inherent in your trading portfolio. The positions in your account are evaluated, including any hedged positions that decrease potential risk, and based on their risk profile, used to create your margin requirements.
Example profit / loss on stock trade using margin
Example profit / loss on stock trade using margin: Bought 100
shares @ $40 (50 shares with cash and 50 shares on margin)

IBKR Clients Have Access to the Lowest Margin Rates1

Rated Lowest Margin Rates1 by StockBrokers.com


AUD Margin Loan Rates Comparison2

AUD 50K AUD 100K AUD 250K AUD 500K
Interactive Brokers (No Surcharge)3,4,5 6.223% 6.223% 6.023% 5.873%
Interactive Brokers (Surcharge)3,5,6 7.223% 7.223% 7.023% 6.873%
Westpac Online 8.35% 8.35% 8.35% 8.35%
NABTrade 9.00% 9.00% 8.75% 8.65%
St.George Bank 10.33% 10.33% 10.08% 9.83%
Bell Direct 9.90% 9.90% 9.90% 9.90%
Webull 9.60% 9.60% 9.60% 9.60%

Each firm's information reflects the standard online margin loan rates obtained from their respective websites. Competitor rates and offers subject to change without notice. Services vary by firm.

Other currency margin loans available at comparably low rates.

View Margin Rate Details

Notes:

  1. According to StockBrokers.com Interactive Brokers Review: Read the full article Online Broker Reviews, May 6, 2024. "Professionals can take advantage of industry-leading commissions, including the lowest margin rates across all balance tiers."
  2. Annual Percentage Rate (APR) on AUD margin loan balances as of November 11, 2024. IBKR calculates the interest charged on margin loans using the applicable rates for each interest rate tier listed on its website. Rates subject to change. For additional information on margin loan rates, visit our website.
  3. IBKR calculates the interest charged on margin loans using the applicable rates for each interest rate tier listed on its website. For additional information, visit our website. Under some commission plans, overnight carrying fees may apply.
  4. The standard rate (i.e. without IBAU surcharge) applies for non-retail (wholesale or professional investor) clients of IBKR Australia, excluding non-retail natural person clients of IBKR Australia (wholesale or professional investor) with a Standard Margin Lending Facility.
  5. IBAU customers are only able to hold and borrow supported currencies. Foreign exchange conversion fees will apply to convert margin loan balances drawn down for purchases denominated in unsupported currencies. Visit our Knowledge Base for more information.
  6. For all retail clients of IBKR Australia and non-retail (wholesale or professional investor) natural person clients of IBKR Australia with a Standard Margin Lending Facility), an additional spread ("IBAU Surcharge") will be added to the standard rates in all tiers. The IBAU Surcharge is currently 1% for borrows in AUD and 2% on all other borrowings. Visit our Knowledge Base for more information on margin accounts under IBKR Australia, as well as our Knowledge Base for more information on regulatory status under IBKR Australia.

Margin Education Course on Traders' Academy

Introduction to Margin Trading

This course is designed to help investors understand margin basics, including different types of margin accounts, margining methods, and margin requirements, plus how to monitor margin on both Trader Workstation (TWS) and IBKR Mobile.

Trading on margin is only for sophisticated traders. You may lose more than your initial investment.

  • Introduction to Margin
  • Monitoring Margin in TWS
  • Looking at Margin on IBKR Mobile
Take Introduction to Margin Trading
Infographic: What is Margin Trading
Futures trading at IBKR

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Disclosures

  1. According to StockBrokers.com Interactive Brokers Review: Read the full article Online Broker Reviews, May 6, 2024. "Professionals can take advantage of industry-leading commissions, including the lowest margin rates across all balance tiers."

Pursuant to Part 7.8A of the Corporations Act 2001, Interactive Brokers Australia Pty. Ltd. has prepared the following target market determinations relating to certain financial products for which it is deemed to be the issuer. Our Target Market Determinations are located here: Target Market Determinations.

Product Disclosure Statements are also available for each of these products. If applicable, you should carefully consider these Disclosures in deciding whether to acquire, or to continue to hold, the relevant financial product.