What Is Margin in Trading?

Explained

Margin is not a fee or a cost but part of your money set aside, returned when the trade closes. The more trades you open, the more margin is used and the less free margin you have; if equity falls far enough the account reaches a margin call and then a forced close.

Example

Example with made-up numbersA 0.5-lot GBP/USD trade at 1.2000 is worth 50,000 × 1.2 = 60,000 dollars. At 1:200 leverage the margin is 60,000 ÷ 200 = 300 dollars.

Use it in Joymista

• DEMO TRADINGA practice account on the Joymista chart: real prices, no risk

Related terms

• LeverageLeverage lets you open a trade bigger than your balance by putting up only part of it as…
• Free MarginFree margin is the money in your account available to open new trades or absorb losses on…
• Margin LevelMargin level is a ratio that shows how healthy an account is: equity divided by used…