So what is meant by the term “margin”? Excellent question my high saturated educator. Let’s get back to our previous example:
“For example, in the forex investment, you can control $1000 with a $100 deposit. Your leverage, which convey a true impression in ratios, is now 1:100. You’re now controlling $1000 with $100.”
The $100 deposit is the “margin” you have to grant in order to use the leverage.
Margin is the deposit withdrawn from you as collateral to cover for losses if any that may result from trades that you make. It is returned to your account when a trade is closed. Your broker uses it to persevere in your position. Your broker for the most part takes your margin deposit and put them with everyone else’s margin deposits, and uses this one “super huge margin deposit” to be able to operate trades with the interbanks.
Margin is usually represented by a percentage of the whole amount of the position. As an example, most of forex brokers require 2%,
“For example, in the forex investment, you can control $1000 with a $100 deposit. Your leverage, which convey a true impression in ratios, is now 1:100. You’re now controlling $1000 with $100.”
The $100 deposit is the “margin” you have to grant in order to use the leverage.
Margin is the deposit withdrawn from you as collateral to cover for losses if any that may result from trades that you make. It is returned to your account when a trade is closed. Your broker uses it to persevere in your position. Your broker for the most part takes your margin deposit and put them with everyone else’s margin deposits, and uses this one “super huge margin deposit” to be able to operate trades with the interbanks.
Margin is usually represented by a percentage of the whole amount of the position. As an example, most of forex brokers require 2%,
1%, 0.5% or 0.25% margin. The maximum leverage you can handle with your trading account depends on the margin required by your broker.
These are the widely accepted leverage most brokers offer:Required Margin Leverage Offered.
These are the widely accepted leverage most brokers offer:Required Margin Leverage Offered.
25% 1:400.
5% 1:200
5% 1:20
3% 1:33
2% 1:50
1% 1:100
Apart from “margin required”, you will for the most part see other “margin” terms in your trading platform. There is much mixture about what this different “margins” mean so I will try my best to explain each term:
Margin required: is the deposit withdrawn from you as collateral to cover for losses if any that may result from trades that you makes.Account margin: This is just another brief expression for your trading money supply. Used margin: The act of your broker locking up amount of money to keep your current positions open. It is returned to your account when a trade is closed or when you receive a margin call. Usable margin: This is the available money in your account to open new positions with. Margin call: If the equity in your account goes below your usable margin, a margin call will come into existence and some or all open positions will be closed by the dealing desk at the market price.
Apart from “margin required”, you will for the most part see other “margin” terms in your trading platform. There is much mixture about what this different “margins” mean so I will try my best to explain each term:
Margin required: is the deposit withdrawn from you as collateral to cover for losses if any that may result from trades that you makes.Account margin: This is just another brief expression for your trading money supply. Used margin: The act of your broker locking up amount of money to keep your current positions open. It is returned to your account when a trade is closed or when you receive a margin call. Usable margin: This is the available money in your account to open new positions with. Margin call: If the equity in your account goes below your usable margin, a margin call will come into existence and some or all open positions will be closed by the dealing desk at the market price.
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