What is margin?
Margin trading allows you to free up your capital by placing only a small percentage of the value of trade in your account. Profit and loss is credited and debited to your margin deposit as the market moves. Margins start from 3% for Share CFDs and 1% for Index, Sector, Treasury and Commodity CFDs.
Margin is essentially collateral for a position. It allows traders to take on leveraged positions with a fraction of the equity necessary to fund the trade. In the equity markets, the usual margin allowed is 50% which means an investor has double the buying power. In the forex market leverage ranges from 1% to 2%, giving investors the high leverage needed to trade actively. Increasing leverage increases risk.
Margin is essentially collateral for a position. If the market moves against a customer’s position, additional funds will be requested through a “margin call.” If there are insufficient available funds, immediately the customer’s open positions will be closed out. It is important to note that when a trader makes a trade the Market Maker (Forex broker) segregates $1000 of margin for each lot traded ($100 on a mini account). This is NOT your risk. Your actual risk on the trade is the amount the Forex Broker charges to enter the trade (typically 3-10 pips depending on currency cross) and the amount of your stop loss.
Margin is essentially collateral for a position. It allows traders to take on leveraged positions with a fraction of the equity necessary to fund the trade. In the equity markets, the usual margin allowed is 50% which means an investor has double the buying power. In the forex market leverage ranges from 1% to 2%, giving investors the high leverage needed to trade actively. It’s always important to remember that while higher leverage can increase gains, it can also increase losses by the same degree.
Margin is essentially collateral for a forex position. If the market moves against a customer’s position, Aaron Trading or ADM Investor Services will request additional funds through a “margin call.” If there are insufficient available funds, Aaron Trading or ADM Investor Services will immediately close out the customer’s open forex positions.
