Margin is the total amount of money required as a “good faith deposit” in order to create a place for your trade. It depends on the account type you hold, trading instrument’s liquidity and volatility, and it is updated periodically for price oscillations. The Financial instrument which allows you to take a position that is worth more in the market than an initial outlay is a leveraged product. Different leveraged products work in different ways, but all amplify the potential profit and loss for a trader. Leveraged products will mostly require you to pay a margin.
|Maximum forex leverage||Equity|
|Cent (in Cents)||Classic (in USD)||ECN (in USD)|
|1:1000||upto 25000||1 to 499||-|
|1:500||25001 to 50000||500 to 1999||-|
|1:400||50001 to 100000||2000 to 3999||-|
|1:300||100001 to 150000||4000 to 7999||-|
|1:200||150001 to 200000||8000 to 14999||1 to 9999|
Margin requirements can be different according to the currency pairs and shall be subjected to change depending on the economic conditions. Margin requirements are calculated based on a maximum leverage of 1:100. A complete list of margin requirements by currency pair can be viewed here.
Leverage is a byproduct of margin and allows an individual to control larger trade sizes. Traders will use this tool as a way to magnify their returns. It’s imperative to stress that losses are also magnified when leverage is used. Therefore, it is important to understand that leverage needs to be controlled.