Margin

MARGIN LEVELS

When you trade on a margin, it will be possible for you to leverage your capital and as such you will have greater chances of making more profit. When it comes to trading in the foreign exchange market, one thing you should realize is that it is not necessary for you to lock up a lump sum. The Margin is measured by making use of two methods and these are:

• Used margin.
• Free margin.

Used margin refers to that the sum of money that is utilized to hold open positions. On the other hand, free margin refers to the money that is not in use and which could be utilized to hold other positions. It is possible for you to monitor your margin and given below are the techniques that you can make use of for the purpose of calculating your margin levels.

• • Account equity: This is the floating value of the money that you have in your account after the profits/losses made in the open trades have been considered. In case you choose to close your open trades, the amount will be locked in and it will be considered as the balance of your account.
• • Account balance: This is the value of the money in your account without adding or deducting the profits or losses that you have made in the open trades.
• • Used margin: This is the amount of fund that you have invested in open trades. In other words, the used margin is considered to be as the money you invested on the trade. Your account should have at least this amount for the purpose of supporting the open positions.
• • Useable margin: This is considered to be the margin that is not in use or that is invested in open trades. You can use this amount to carry out new trade. You can also make use of it to support a margin close-out.