What is Margin?

Margin refers to the cash collateral required to enter into positions larger than your actual account balance in leveraged forex trading. In forex trading, you can easily leverage the funds in your account based on the margin requirements for a much greater investing market effect. Metaphorically, the term "leverage" also means that you can move a heavy object with little effort required.

The higher the leverage, the lower the margin capital required.By leveraging your funds, if the market moves in favour of your position, you can take advantage of small market movements to potentially generate large profits relative to the amount invested.Conversely, increasing leverage increases risk.

What is Required Margin?

Required Margin refers to the amount of margin required to maintain any pending orders and outstanding positions. All pending new orders and open positions are required to be fully (100%) margined at all times.

EXAMPLE: If you open a trade of 10,000 units EUR/USD at the exchange rate of 1.40000, the required margin would be 700 USD (5% of currency contract value). Given if the conversion rate USD is 7.75, the required margin would be 5,425 USD for the trade.

Margin Ratio and Leverage

Margin Ratio(in %) Leverage
2,000% 1 : 1
1,000% 2 : 1
500% 4 : 1
200% 10:1
Below 100% Exceeds 20 : 1 - No new positions will be allowed.
Below 60% Margin call will be triggered and you will be called upon to top up the insufficient margin.
Below 20% Auto-Closeout will be triggered.
(i.e., all your existing positions will be closed out automatically.)