The self-regulatory organization for US broker-dealers, overseen by the SEC; it writes rules such as the PDT rule and licenses brokers.
FINRA examines brokerages, arbitrates disputes between customers and brokers, and maintains BrokerCheck, where you can look up any broker's history. It sets the pattern-day-trader-rule and margin maintenance minimums.
If a broker does something wrong, FINRA arbitration is typically where the dispute goes.
Example: before opening an account, a trader checks the firm on BrokerCheck and finds three customer complaints and a regulatory fine in the last five years.
Original diagrams for the ideas on this page. Illustrative, not real market data.
Margin and leverage. A $5,000 deposit can control a $100,000 position, which is 20:1 leverage. Because the loss is measured on the full $100,000, a 2.5% move against you halves the deposit and brings a margin call, and a 5% move uses all of it.
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