What does Margin mean? Understand the concept of money guarantee in trading from the beginning.

2026-01-06 19:07:20

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What is Margin - The Basics You Need to Know

If you’re just starting to trade, you might be confused by the term margin. This is not a fee and not a trading cost. Margin means collateral - the amount of money you need to deposit into your account to open a trading position.

Suppose you want to control a $100,000 position, but you don’t need to have $100,000 in full. Because your broker only reserves a portion of the funds, such as ( $1,000), in your account. That is the initial margin - a “lock-in” of that amount temporarily to manage the position.

The Relationship Between Margin and Leverage

Margin and leverage go hand in hand. When your broker offers you 200:1 leverage, it means you only need to deposit a margin of 0.5% of the contract value. All characters

Margin Calculation Formula:

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