HARVEST INTERNATIONAL | Hicfx.com | Margin and Leverage
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Margin and Leverage

Margin

The real meaning of margin is actually good faith deposit.

Initial Margin

The amount of money required to open a trading account.

Required Margin

The amount of money required to trade one particular instrument. For example, GBPUSD, required margin is US$1000. It means that you need to have more than US$1000 in your trading account to initiate a trade.

Call Margin

If you have a losing position with a floating loss, then your broker might issue a call margin on your account. A call margin is an amount of money required to maintain your losing position. If the call margin is not fulfilled, the losing position might suffer an automatic liquidation.

leverage

Leverage

The phenomenon of moving a larger object with lesser effort with the use of fulcrum is known as leverage.

Trading futures allows the use of smaller amount of money to trade a bigger amount. How so?

Leverage of 100:1. The actual amount of money per forex contract is US$100,000.00 . But, by using leverage, you need only US1,000.00 margin to trade 1 forex contract.