Trading on margin is a way for traders with limited capital to make significant profits (or losses).
Leverage is the increased “trading power” that is available when using a margin account.
The Stop Out Level is similar to the Margin Call Level, which was covered in the previous lesson, except that it’s much worse!
In forex trading, the Margin Call Level is when the Margin Level has reached a specific level or threshold.
The Margin Level is the percentage (%) value based on the amount of Equity versus Used Margin.
Margin can be classified as either “used” or “free”.
Equity is the current value of the account and fluctuates with every tick when looking at your trading platform on your screen. It is the sum of your account balance and all floating (unrealized) profits or losses associated with your open positions. As your current trades rise or fall in value, so does your Equity. How to […]
In order to understand what Used Margin is, we must first understand what Required Margin is.
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 (%) […]
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