Margin
The collateral required to open and maintain a leveraged trading position.
Margin is the deposit a broker holds to open a leveraged position - roughly 3.3% of notional at 30:1 leverage. It is collateral, not a fee, and it is returned when the trade closes.
Margin is the amount of money required to open and maintain a leveraged trading position. It acts as collateral against potential losses. Margin requirements vary by broker, instrument, and regulatory jurisdiction. The broker locks the margin while the trade is open and returns it when the position closes. Higher leverage means lower margin per position, which sounds like freedom and behaves like a shorter fuse: at 500:1, a 0.2% move against you triggers a margin call.
How It Works
- Used margin: funds locked in open positions
- Free margin: available for new trades
- Margin level: (Equity / Used Margin) × 100%
- Below margin call level triggers warnings
Types of Margin
Initial Margin
Required to open a position
Maintenance Margin
Required to keep position open
Variation Margin
Daily profit/loss adjustments
Trading Tips
Monitor your margin level constantly
Never use all available margin
Different instruments have different margin requirements
Related Terms
Sources
- InvestopediaMargin in trading
- FCAUK margin and leverage rules
Put Your Knowledge Into Practice
Compare regulated brokers and find the best one for your trading style.