Margin is the collateral a trader must deposit with their broker in order to open and maintain a leveraged position. It represents only a fraction of the total position value and allows larger market exposure with less capital.
The required margin depends on the chosen leverage, the traded instrument, and regulatory requirements. In the EU, for example, the margin requirement for EUR/USD at a leverage of 1:30 is approximately 3.33% of the position value.
Margin is not the same as maximum loss exposure—losses can exceed the deposited margin. If the available margin falls below a certain level, a margin call may be triggered.
Understanding margin calculation is fundamental for responsible leveraged trading.
