HOW TO UNDERSTAND THE MARGIN FOREX

In today’s topic, we will discuss the margin in the forex market or so called Margin Forex. I will answer some of the most asked questions about margin forex such as what is it? What is free margin? And what is the level of margin? As you may know the margin and its requirements are different according to brokers. So, it is very important to study on how the margin going and select a broker who match you the most.

What margin is

It is said that margin is the most essential part in the forex trading market. But many traders are not clear about the meaning of margin forex or event understand it in a wrong way. Basically, margin is the required amount of money needed to retain the opening positions. It is not considered a fee or charge, it is a part of your fund and be set aside as a security deposit.

The margin is often calculated by the percentage of the total amount value of all your open positions. Normally, the margin forex is about 0.6%, 1.6%, 1.1% or 2.2% according to the requirement deposit asked by your forex brokers. 

Free margin

Free margin is known as the amount that makes no connection with any of your transactions. And traders often use it to make more opening positions. But it is not everything. It is also distinguish between the free margin and your fund. If your opening position are win more, your profit is increasing and makes your fund becomes bigger. It is very helpful when you want to maintain the opening position and have pending positions at the same time. 

Your positions are not done in the condition that you have not enough free margin balance. Of course, this position will not be activated and postponed. This is the reason why sometimes you think that your broker is not able to carry out your trading. In this case, it is not right. This is simply that you do not have enough free margin in your balance.

Margin call

It is believed the most nightmare of forex traders including the professionals and experts. It is begun when you receive a call from your broker informing that your margin is lower than the minimum requirement due to your positions have failed.

Of course you can always make money from the forex market but you must remember that there are always risks as well. This is the reason why you should know how the margin forex works and read carefully the agreement with your forex brokers. When you feel vague about any point in the agreement, you must ask your broker to give you satisfying answers. 

There is difficulty in forex call, it is sometimes you do not receive the call before your position is cancelled. If your money is less than the requirement, your broker will cancel your positions. It is to protect your balance from going down to negative.

In brief, through this topic I hope to give you enough information to understand the margin forex as well as the important parts that may lead to unexpected results. To avoid it, you need to study on all the aspects of the margin in the forex market as well as take advantage of your trading skills to build up a safe and successful trading strategy. It is the truth that good beginning leads to good results.