Margin

Submitted by Sharemarket News on 19 April, 2011 - 14:27

Margin is the money you put up to trade forex. If you have $200 in your account and your leverage is 200:1, you can trade up to $200,000 in currencies. It may also refer to CFD Margin.

The margin may also be "Marked to Market" and is similar to how CFD's utilise margin:

The margin is actively marked to the market price – which means the percentage is actively being calculated as the share price moves. You must keep a margin on all open positions over the required level including any market profits or losses (paper profits and losses) as long as the position is open. If the trading position moves against you and reduces your cash balance and you end up in the red below the required margin level you will receive a “Margin Call” and will need to fund the account to maintain the position otherwise your CFDs would be automatically liquidated.

Glossary List