Margin ?

Margin is your capital in trading..

Margin is just literally the account you need to have to start participating in the market. Now , different brokers have different minimum margins for different kinds of accounts and different leverage setting. Some brokers can offer you as least as $1 to open an account, while some used to have a minimum of $1000.

In Forex, the lower your account is , the higher your leverage setting will be.

Now, you can encounter Minimum Marginal Requirement or MMR. MMR’s are generally the amount needed for you to enter the market when you trade an specific currency pair.

So lets say I wanna go trade .01lot of EurUsd, and that pair costs $10 on my broker. I will be needing at least $15 to execute it, $10 will be deducted from it as I enter the market and $5 will be left so that my pair can move at most 50pips. When EU goes more than 50pips against my trade, even without SL, I will be stopped out and get a losing trade. But, I can still get my $10 back. But if I had a good trade, then I will be closing it at 20pips lets say, well with 0.01lots, I am expected to profit $2. My account will then become $17.

Some brokers may not use your MMR as you enter the market, and some uses it. For those who use it, which usually are the brokers who has a big big leverage, the risk will be is to lose the account to at most 98-100% . It is important then to check your broker’s set up before you go start trading.

Meanwhile ..

 

 

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