Category: 6.Margin Trading 101: Understand How Your Margin Account Works

When margin is expressed as a specific amount of your account’s currency, this amount is known as the Required Margin. EACH position you open will have its own Required Margin amount that will need to be “locked up”. Required Margin is also known as Deposit Margin, Entry Margin, or Initial Margin. Let’s look at a typical EUR/USD (euro against U.S. dollar) trade.…

Margin is expressed as a percentage (%) of the “full position size”, also known as the “Notional Value” of the position you wish to open. Depending on the currency pair and forex broker, the amount of margin required to open a position VARIES. You may see margin requirements such as 0.25%, 0.5%, 1%, 2%, 5%, 10% or higher. This percentage (%)…

When trading forex, you are only required to put up a small amount of capital to open and maintain a new position. This capital is known as the margin. For example, if you want to buy $100,000 worth of USD/JPY, you don’t need to put up the full amount, you only need to put up a portion, like $3,000.…

In your trading platform, you will see something that says “Unrealized P/L” or “Floating P/L” with green or red numbers beside them. In this lesson, we explain what Unrealized P/L and Floating P/L are. When trading, there are actually two different types of “profit or loss”, also known as “P/L”. Both are important. Let’s discuss the difference between the…

What does “Account Balance” mean? In order to start trading forex, you need to open an account with a retail forex broker or CFD provider. Once your account is approved, then you can transfer funds into the account. This new account should only be funded with “risk capital”, which is cash you can afford to lose. The “Account…

The biggest appeal that forex trading offers is the ability to trade on margin. But for many forex traders, “margin” is a foreign concept and one that is often misunderstood. Like Bob. Bob sure knows his fried chicken and mashed potatoes but absolutely has no clue about margin and leverage. Margin trading gives you the ability…