What is Margin?

Margin

Written by Anna Niedobova

Updated: 2024-08-19 11:58:57

When opening a trade, you will need a certain amount of outlay. This is known as margin. The margin is not a cost, but is an amount of money that is frozen when you open a position and returned to you once the transaction has been closed.

It's important to know what amount the margin will be so you can evaluate not only the risk itself, but also calculate whether the remaining funds will allow you to open additional positions.

Remember that with CFDs, you only need a fraction of the nominal value to be able to open a position. For example, with a leverage of 30:1 you’d only need 3.33% of the nominal value for the margin of the transaction.

Let’s say you’d like to open a 0,10 lot transaction on EUR/USD with leverage of 30:1, but you don’t know what the nominal value per lot is for this instrument.

The built-in investment calculator on the xStation platform will instantly calculate the value of the required deposit for you, which depends on the size of the selected position and the financial leverage of the market.

In the example above, the margin required to open this position is EUR 333.

In order to open and maintain your positions, you must have sufficient Free Margin in your main account to meet any margin requirements. Free Margin is the capital that you have to use to open new trades or to cover possible negative market movements on already opened positions.

Remember, margin trading with CFDs is high risk and is not suitable for all investors. Please consider the risks involved.

If you still need help with your question,

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