What Is Margin? | FXTM Learn Forex in 60 Seconds

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ForexTime Ltd (www.forextime.com/eu) does not provide services to retail clients. Risk warning: CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
ForexTime Ltd (www.forextime.com/eu) does not provide services to retail clients.
Margin is the amount of funds that the broker requires from the trader as collateral, in order to open a specific position of volume based on the leverage that the client has selected.
Watch the video for the full definition straight from FXTM Head of Education, Andreas Thalassinos.
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Disclaimer: The content in this video comprises personal opinions and ideas and should not be construed as containing personal and/or other investment advice and/or an offer of and/or solicitation for any transactions in financial instruments and/or a guarantee and/or prediction of future performance. FXTM, its affiliates, agents, directors, officers or employees do not guarantee the accuracy, validity, timeliness or completeness of any information or data made available and assume no liability as to any loss arising from any investment based on the same.
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[@swedensroutine6127]

If Ideposit 2000 USD and trade with it and make benefits and with benefits I have 30,000 USD after a period, Then if I make this trade with 20,000 USD of my 30,000 USD existing in my account, is it possible to do it ? Or I most deposit 20,000 USD also to do this transaction as in this video?

[@fxtmglobal]

Hello کار و زندگی در سوئد! Yes, it is possible. Kindly contact our customer support at fxtm.co/start-chat-now to get full consultation. Our specialists will be glad to assist you.

[@fernandoluis53]

If you deposid only $20k, how can you buy $240k worth of USDEUR?

[@fxtmglobal]

Hello Ownage Zizou! It is possible because of leverage. Leverage is offered by brokers to maximize traders' buying power by giving them the ability to deposit a small amount of funds and trade larger volumes. Leverage is expressed as a ratio form, so if it is 1:100 for example, a trader's buying power is magnified 100 times. For example to open 1 lot EUR/USD at 1:1000 Leverage, you will only need 100 EUR: Margin = Notional value / Leverage = 100,000 EUR / 1000 = 100 EUR.

[@bryansuetens8254]

where does the 4 procent comes from, or is this dependant on the broker ?

[@fxtmglobal]

Hello! Please see the following link www.forextime.com/about-us/fxtm-faq/calculations#faq5-details_c and note that Margin = Notional value / Leverage. Since the leverage in the example here is 1:25, Margin is 4%. Shall you need further explanation, kindly contact our customer support at fxtm.co/start-chat-now .

[@Tech-To-Logic]

I think there is a wrong calculation in this video, if leverage ratio is 1:25, my deposit amount is 20000 dollar, now if I buy 2 standard lot then bought unit should be 20000*25=300000 So Margin should be like this 300000*1.2000=360 000 *4% = 14400

[@fxtmglobal]

Hi Ajijul Mondal, thank you for getting in touch with us. Kindly contact our customer support at fxtm.co/start-chat-now to get full consultation. Our specialists will be glad to assist you.

[@judylin5020]

Just for reference. The leverage ratio 1:25 is means the trading capital is 25 times of deposit amount, US$20,000 x 25 = US$500,000.

[@paolo-andre]

use a calculator bro

[@ripplerfx]

So basically if I have $20k in my account, I need to ALWAYS have at LEAST $9,600 in free margin to hold a 2.0 lot of EURUSD? And if I don't have $9,600 of free margin my 2.0 lot trade will hit margin call and close me with a loss of $9,600?

[@fxtmglobal]

Hello Tommy Lai, Thank you for your question. The margin calculation formula for various trading instruments is: Volume of order * Contract/Lot Size * Price / Leverage. Your margin for holding 2 lots of a specific currency pair may differ depending on the leverage of your trading account. In your example, if your account leverage is 1:25, the margin required for keeping 2 lots of EURUSD will be $9600; however, in another example of your maximum account leverage 1:2000 (for major currency pairs), the margin will be $255 (provided the EURUSD price is the same - 1.2000). Please be informed that the leverage we offer on our accounts is floating - you can check our floating leverage requirements here: www.forextime.com/trading-accounts/leverage-margin-requirements Please note that the position will close due to Stop Out at that moment when your Margin Level reaches the Stop Out level. Margin Level is the ratio of your Equity to the Used Margin of your open positions, indicated as a percentage (formula: Equity/Margin Used x 100). In your example, the margin level will be $20000 / $9600 x 100% = approximately 208%. Once your Margin level reaches 40% (if you trade on Micro account) or 50% (if you use Advantage or Advantage Plus accounts), your position(s) will be stopped out. Free Margin is the amount of margin you have to open more new positions. It is calculated according to the following formula: Equity - Used Margin. In your example, Free Margin will be $20000 - $9600 = $10400. You can watch FXTM’s series of 10 educational videos to learn about all financial instruments and main financial terms: www.forextime.com/education/videos . Shall you need more assistance, you can always contact our Customer Support team via Live chat: fxtm.co/start-chat-now - and our agents will gladly answer all your questions!

[@MichicraftLP]

Yes