Definition of margin Margin is defined as the amount of money required in your account to maintain your market positions using leverage. This is simply because you can usually trade up to 100 times the money you actually have. In other words, margin is a courtesy deposit needed to access a leveraging facility forex margin and free meaning forex. Your deposit is also known as an initial margin or initial deposit.
100 in your account and your leverage is 100:1. When the level of maintenence margin drop below the required level, a margin call will be issued by your broker to bring the level up again. In this event, an investor have two options, that is to top up his account balance or to liquidate his trades to meet the requirement. This usually happens when an investor suffer losses in an open position, resulting in brokerage firm seeking some form of security. According to authors John Jagerson and S. 1,000 per contract in a full-size account. 1000 they have set aside is the maximum amount they can lose in the trade.
This couldn’t be farther from the truth. Hence, just like an investor is able to enjoy 100 times of profit, one also stand to lose 100 times one’s money. Because of this, margin should be used wisely and moderately along with safety precaution such as using a stop-loss order. These funds are not being used as collateral in trades on the Forex financial market. Alpari Limited, Cedar Hill Crest, Villa, Kingstown VC0100, Saint Vincent and the Grenadines, West Indies, is incorporated under registered number 20389 IBC 2012 by the Registrar of International Business Companies, registered by the Financial Services Authority of Saint Vincent and the Grenadines.
Alpari is a member of The Financial Commission, an international organization engaged in the resolution of disputes within the financial services industry in the Forex market. Risk disclaimer: Before trading, you should ensure that you fully understand the risks involved in leveraged trading and have the required experience. To be redirected to the European Alpari website, operated by Alpari Europe Ltd. Malta and regulated by MFSA, click Continue.