In trading, margin is the amount of capital required to open and maintain a leveraged position. It acts as collateral against potential losses.
⚠️ Note:
This glossary entry refers specifically to margin in leveraged trading (e.g., Forex, CFDs, futures). For margin in accounting or stock investing, see:
👉 Gross Margin
👉 Margin Account
Margin allows traders to control larger positions with smaller capital. For example, with 1:100 leverage, a $1,000 margin lets you trade $100,000 worth of currency. It’s not a cost but a temporary security deposit held by your broker while your position is open.
There are two key types of trading margin:
If your account equity drops too low, your broker may issue a margin call or automatically close positions (stop-out) to prevent further losses.
| Context | Meaning of Margin |
|---|---|
| Forex / CFDs | Collateral for leveraged trades |
| Stock Trading | Borrowed money from broker to buy more shares (margin account) |
| Accounting | Profit margin (e.g., gross margin = revenue – cost of goods) |
With 1:50 leverage, a trader needs $2,000 in margin to open a $100,000 position in EUR/USD.
Leverage, Margin Call, Stop Out, Free Margin, Equity, Risk Management, Margin Account, Gross Margin
Category:
Forex / Risk Control
Margin gives you power—but don’t abuse it. Over-leveraging is the #1 reason traders blow accounts. Use strict margin rules and monitor your margin level daily.
