What is a margin?
Margin is the amount of money needed to open a leveraged trading position. It is the difference between the full value of your position and the funds being lent to you by a broker or leverage provider.
There are two types of margin to consider when you’re trading: initial margin and maintenance margin. The initial margin is the deposit required to open the position, often called the deposit margin or just the deposit. Once you have opened your position, you might need to add more money if your trade starts to incur a loss and your deposit margin is no longer enough to keep the position open. If this happens, your provider will place you on margin call, and you’ll be required to top up the funds in your account – this additional capital is known as the maintenance margin.
Margin is the deposit required to use leveraged products, such as CFDs and spread bets. Using leverage can enable you to get full market exposure by putting up just a fraction of a trade’s full value. The amount of margin required will usually be given as a percentage.
