The collateral required by your broker to open and maintain a leveraged position.
Margin is the amount of money your broker requires you to deposit to open a leveraged trade. It is expressed as a percentage of the total position size. At 100:1 leverage, the margin requirement is 1% — meaning you need $1,000 to control $100,000. If your account falls below the maintenance margin, you receive a margin call and positions may be automatically closed.
Understanding margin prevents unexpected account liquidation. Margin calls happen when losses reduce your equity below the broker’s required level. This can force you out of positions at the worst possible time. Always ensure you have sufficient margin buffer, especially during volatile markets.
Your broker requires 2% margin (50:1 leverage). To open a $50,000 position, you need $1,000 in margin. If the trade moves against you and your account equity drops close to the $1,000 margin requirement, your broker may close your position automatically.
With 2% margin (50:1 leverage), you deposit $1,000 to control a $50,000 position. The broker provides the rest.