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Margin and

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Margin and Leverages

Margin and Leverages

 

 

About Margin

Margin is a term used in the financial world to indicate a guarantee that must be placed by the holder of a position (selling or buying) in securities trading, options, or futures contracts to protect the credit risk of counterparties.

Margin is expressed as a presentation of a position size (for example 5% or 1%) and the only reason to have funds on your trading account is to ensure sufficient margin. With a margin of 1%, for example for the position of $ 1 000 000 you only need a deposit of $ 10 000. Margin Call at 50% and Stop Out at 30%.

Leverage up to 1:100

Using leverage allows you to trade in a position that is greater than the amount of funds you have in your account. Leverage is expressed as a ratio, for example 50: 1, or 100: 1. In the world of finance and forex, leverage refers to the use of various financial instruments or loan funds to increase the potential return on an investment. The existence of this leverage is what makes more traders can take part, not only those who have large funds, because leverage makes capital requirements to participate in forex trading to be smaller.

Risk of Leverage

On the one hand, using leverage, you can make substantial profits from your relatively small initial investment. On the other hand, you can also experience a drastic loss if you do not apply the right risk management.

Margin Call

Once your equity falls below 50% of the margin needed to maintain your trading position, we will try to inform you with a margin call warning that you do not have enough capital to support your trading position.

Stop-Out level

Stop-out level refers to the level of equity when your open trading position can be automatically closed.