A margin is the relative amount necessary to carry out a leveraged deal, taking into consideration spreads, leveraging and currency conversions. When trading on margin, you are using borrowed funds to place orders, in contrast with directly owning and using the funds deposited or held on your account. 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. Here, margin can be described as a deposit or collateral that is needed to open a position and keep it open.
There is a high level of risk involved when trading leveraged products such as Forex/CFDs. The leveraged nature of Forex/CFD trading means that any market movement will have an equally proportional effect on your capital. When trading or investing, you must always take into consideration the level of your experience. You should not trade or invest unless you fully understand the true extent of your exposure to the risk of loss. If the risks involved seem unclear to you, please apply to a qualified financial advisor for an independent and professional advice.
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