Margin is a portion of the trader's funds that your Forex broker sets aside to ensure that you can cover the potential loss of the trade. This portion is essentially locked up by your broker for the duration of the specific trade. Once you close the trade, the margin is released back into your account and you can now use it again, to open new trades.
Trading Forex is all about spotting opportunities and choosing how much you want to invest. Let's be honest, nobody likes to lose money when trading. In fact, we all like to see our account balance grow! And that's one of the reasons why calculating your margin (or leveraged trading) is extremely important. Calculating the margin right on the money is a must for your risk management strategy. Why? Opening a trade with too much margin can lead to a margin call. Opening a trade with insufficient margin can lead to profitable trade with no actual impact on your trading account. Say YES to margin trading!
Working with the Forex Margin Calculator is easy! Simply enter the base currency of your account (also called account currency), select the currency pair you're looking to trade, the leverage (also known as margin ratio), and the size of your position in lots. Once you filled up all of these fields, simply hit the Calculate button and watch the magic happen! And for the curious ones out there, let's take a look at an example of how this calculator works behind the screens.
