Beginner Guide: How Rate Hikes Move Your Margin Requirements

When the Fed hikes rates, it doesn't just affect savings accounts — it reshapes the cost of leverage in your trading account. Leverage lets you control a larger position with a smaller deposit (margin), but higher rates often mean higher overnight financing costs on leveraged positions.

Margin is the collateral your broker holds to keep a leveraged trade open. If the market moves against you and your equity falls below the required margin level, you'll face a margin call — a demand to add funds or have positions closed automatically.

Beginners should treat leverage cautiously: a 10:1 ratio amplifies both gains and losses tenfold. Start small, understand your broker's margin requirements, and never risk more than you can afford to lose on a single trade.