Margin

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    MarginWhat is marginWhat is margin? In online trading, Margin is the amount a t... More?

    In online trading, Margin is the amount a trader has as collateral to cover any losses incurred by a losing trade. It is measured as a percentage of the current market value of the securities held in the account.

    It can also refer to a loan taken out by a trader in orderWhat is a trade order? In trading, an order can be defi... More to buy securities. This is known as “buying on margin”.

    In business, margin refers to the difference between the cost of producing a goods or service and its sale priceWhat are value stocks? A value company is a company that app... More.

    Margin in online trading

    Just as leveraging a trade carries a high risk, the margin has its own risks. For example, a trader buying on margin has to make interest payments on the loan, and must ensure there is enough in the margin account to cover themselves if the marketWhat are value stocks? A value company is a company that app... More moves against them.

    Suppose you want to trade a $100,000 position with a 100:1 leverageLeverage is a means of increasing your potential return on a... More; your brokerWhat is an online broker? In online trading, a broker is ... More will require $1,000 as securityA security is a financial instrument, such as stocks and s... More from your account. The $1,000 can be seen as a deposit you have to make before you can control the $100,000. This deposit is known as a margin or initial margin.

    The margin is usually expressed as a percentage of the position amount, meaning that the broker will require a 2%, 5% or 10% margin. So if you open an account with $10,000 and the margin requirement of the broker is 5%, the initial margin would be $500.

    It is very important that you only trade sizes that will not harm your account and avoid any margin calls. Make sure you have a good knowledge on this matter and on money managementMoney management refers to one of the most important concep... More in general:

    Margin in business language

    Here, the margin is a difference between the cost of producing a goods or service and its sale priceWhat is price? The price is the measure of the value of goo... More.

    A sales strategy such as “pile it high, sell it cheap” can operate on a low margin because the profit is generated by the high volumeWhat is the trading volume? In trading, volume refers t... More of sales. For high-end products, the margin will be much higher and the company will expect to sell fewer units but at a far higher profit.

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