Margin is one of the most important concepts in best forex brokers trading. Without knowing what it is and how margin words, you can’t succeed in forex trading.
Most traders don’t know how important margin is until they start losing money. To avoid the same fate, come and learn what forex margin is now.
WHAT IS FOREX MARGIN?
We can break down best forex brokers margin as a trust deposit. You have to deposit an amount of money to a broker so that you can keep your positions open.
Don’t misunderstand margin as a trading cost or fee. It is more like a fraction of your account equity that you take out and give to brokers a deposit.
You will get your margin back after complete your trade.
You can say that Margin is a double-edged blade. It can help multiplying your profits several times but that also means you can lose a lot more than expected.
The greater the chances, the greater the risk.
Best forex brokers margin is shown in form of a percentage of the amount of money you decide for a position. You can choose how much margin you want, as long as your broker allows it. 1%, 2%, 20%, 50%, 100%, 500%? It’s up to you.
Depends on how much margin your broker offers, you can calculate the leverage that will be applied to your account.
Each broker will offer different margins. Choose wisely what is most suitable for you.
SOME COMMON MARGIN TERMS
Margin requirement: Margin requirement is simply margin. It is the amount of money your Best forex brokers requires from you so that you can open a trading position.
- Account balance
This is the term used to identify your funds. In other words, it is all the money you have in your trading account.
- Used margin
Once you open the position, your deposit will be kept by the broker. This deposit is now called used margin. You will have it back when you complete the trade.
- Usable margin
This is the amount of money remained after your Best forex brokers locks away your used margin.
- Margin call
This is the scary part. When you’re on the verge to lose a lot of money and the used margin can’t even make up for it, you will get a margin call.
Margin call happens when your account balance is lower than the used margin. When there is a margin call, some of your open positions, sometimes all of them, will be closed at the current market price automatically by your Best forex brokers.
So, you can’t touch your used margin unless you finish a trade (close the position) or your account balance falls lower than the used margin and the margin call takes place.
Now you know what forex margin is. Use it carefully. It can help you make so much more money than your original deposit but you must have risk management.
If you lose, you’ll lose big too. So gain experience on Best forex brokers margin and make the most out of it carefully and safely.