Margin
The deposit your broker sets aside to keep a leveraged position open. It equals the position value divided by the leverage.
In practice
A $5,000 account opens 0.50 lots of EUR/USD at 1:30 leverage, locking about $1,800 as margin. The remaining $3,200 is free margin, which absorbs losses and funds new trades.
Treating margin as the amount at risk. You can lose far more than the margin on a trade if there is no stop loss.
Related terms
Leverage
Borrowed exposure that lets you control a position larger than…
Free margin
Equity minus used margin. It is the amount available to open new…
Margin level
Equity divided by used margin, as a percentage. Brokers use it to…
Balance
Your account value from closed trades, deposits and withdrawals,…
Broker
The firm that gives you access to the market, holds your funds and…
Cent account
An account denominated in cents, so balances and lot values are…