What’s margin investing?
Margin investing enables you to borrow money from Robinhood and leverage your holdings to purchase securities. This gives you access to additional buying power based on the value of certain securities in your investing account.
Margin investing access isn’t automatic. You must apply and will only have access if you meet eligibility requirements.
If you apply and are approved for margin investing, you’ll be able to use extra buying power. This additional buying power represents the money that you’re allowed to borrow from us to invest.
Futures margin is different from the securities margin presented in this article which is only pertinent to margin investing offered by Robinhood Financial & Robinhood Securities. For more information on futures margin, check out Futures deficits and margin calls.
Let’s say you deposit $5,000 in cash and borrow $5,000 on margin to buy 100 shares of a stock for $100 per share—for a total of $10,000.
Since $5,000 of your initial purchase was bought on margin, your portfolio value (excluding any crypto positions) is $5,000 ($10,000 - amount borrowed = $5,000).
If the stock price increases to $125 per share, the stock is now worth $12,500. Since $5,000 of your initial purchase was bought on margin, you now have $7,500 in portfolio value and you owe $5,000 in margin used.
In this scenario, there’s an unrealized profit of $2,500 as opposed to $1,250 if you didn’t invest on margin and only bought as many shares of stock that you could with your available cash (50 shares for a total of $5,000).
Crypto holdings are not factored in when issuing margin calls because they aren't securities and are held with our affiliate, Robinhood Crypto, LLC.
Let’s say you deposit $5,000 in cash and borrow $5,000 on margin to buy 100 shares of a stock for $100 per share—for a total of $10,000.
Since $5,000 of your initial purchase was bought on margin, your portfolio value (excluding any crypto positions) is $5,000 ($10,000 - amount borrowed = $5,000).
If the stock price drops to $75 per share, the stock is now worth $7,500. Since $5,000 of your initial purchase was bought on margin, you now have $2,500 in your portfolio value and you owe $5,000 in margin used.
In this scenario, there’s an unrealized loss of $2,500 as opposed to $1,250 if you didn’t invest on margin and only bought as many shares of stock that you could with your available cash (50 shares for a total of $5,000).
Crypto holdings are not factored in when issuing margin calls because they aren't securities and are held with our affiliate, Robinhood Crypto, LLC.
With margin investing, the returns on any securities bought on margin directly affect your investing account value, whether they’re positive or negative. If the security loses value, the losses will be deducted from your account value—not the funds you borrowed—so it’s possible for margin to amplify your losses.
Margin investing is risky and it’s not appropriate for everyone. Before considering margin investing, you should fully understand the risks involved:
Additional information on the terms and risks associated with margin investing can be found in our Margin Disclosure Statement.
Before you can invest on margin, you need to apply for margin investing:
You must meet eligibility requirements and have a minimum portfolio value of $2,000 before you can access margin investing.
You have to determine whether margin investing is consistent with your investment strategy. You should consider your own investment experience, goals, and sensitivity to risk. By enabling margin investing for your investing account, Robinhood isn't recommending the use of margin investing.
Robinhood’s margin rate is applied to the full settled margin balance depending on how much you borrow. Check out Robinhood margin rates for details.
As a Gold member, the first $1,000 of margin investing is included with your subscription fee. If you decide to borrow more, you’ll pay interest on any margin used over $1,000.
Interest is calculated daily at the end of the day based on settled margin balances. For example, if you are not subscribed to Gold and use $3,000 of settled margin, we’ll calculate $0.56 of daily interest as follows: $3,000 settled margin and subject to interest $3,000 * (6.75% / 360) = $0.56 per day
If you’re subscribed to Gold, we’ll calculate daily interest as follows, for example:
We’ll charge the margin interest to your investing account every 30 days at the end of your billing cycle.
To check the current status of your billing cycle and other margin settings:
The margin interest rate may change at any time without notice and at Robinhood Financial’s discretion.
There are a number of ways to stop investing on margin:
To disable margin investing:
If you’re approved for options trading, margin may be required to satisfy exercise or assignment even if you have the Robinhood Gold margin investing feature turned off.
Your available buying power will fluctuate based on the value and volatility of your investments, according to Robinhood’s total maintenance requirement requirements.
You can set a borrowing limit to help you control how much money you’re investing on margin. By setting a limit, you can restrict the amount of margin you have to the amount that you feel comfortable using. You can set this limit to any amount you want that is equal to or less than the margin available to you, or remove this limit anytime.
You can track how much you’ve invested on margin in Account (person icon) → in the app,Menu (3 bars icon) → Investing → Margin investing. The following values are included.
You can also track your buying power and available margin in Investing → Buying power
There are some scenarios where the margin used could go above the borrowing limit. For example, if you get early assignment on an option spread or a bank deposit is reversed after using Instant Deposits.
Robinhood’s variable margin interest rate is based on your settled margin balance and the Federal Funds Target Rate upper bound.
We’ll continue to closely monitor any changes in the Federal Funds Target Rate. Our goal remains to offer the best interest rates we can while taking into account the Federal Funds Target Rate. We anticipate that our interest rates will continue to be lower than many of our competitors.
All examples are hypothetical and don’t reflect actual or anticipated results. Content is provided for informational purposes only, doesn’t constitute investment advice, and isn’t a recommendation for any security, account type or feature, or trading strategy. Past performance doesn’t guarantee future results.
Margin investing involves interest charges and risks, including the potential to lose more than deposited or the need to deposit additional collateral in a falling market. Before using margin, customers must determine whether this type of trading strategy is right for them given their specific investment objectives, experience, risk tolerance, and financial situation.
Regardless of the underlying value of the securities you purchased, you must repay your margin debt. Robinhood Financial can change its maintenance requirements at any time without prior notice. If the equity in your account decreases to less than the total maintenance requirement, you’ll have to deposit additional cash or acceptable collateral. If you fail to meet your minimums, Robinhood Financial may be forced to sell some or all of your securities, with or without your prior approval.
Robinhood Financial charges a variable margin interest rate based on your settled margin balance and the upper bound of the Target Federal Funds Rate, which is set by the Federal Reserve and is subject to change without notice. The formulas used to calculate the margin interest rate are subject to change at Robinhood Financial’s discretion.
For more information, review FINRA’s Investor Alert and Robinhood Financial’s Customer Relationship Summary, Margin Disclosure Statement, and Margin Agreement. These disclosures contain important information on Robinhood Financial’s products and services, conflicts of interests, lending policies, interest charges, and the risks associated with margin investing enabled accounts.