What is margin? This is the amount of funds deposited by the client when implementing a transaction on the Forex market to purchase a currency. It is determined by offers individually and is expressed as a percentage or using a fraction. Margin can be 20% or 1/5 of the total amount of the currency purchase transaction.
To understand what margin is, you should evaluate the increase in the trader ‘s capabilities with such a financial instrument. At the conclusion of the transaction, the trader has the opportunity to significantly increase the capital if the market moves in his favour. When the market moves in the opposite direction, losses grow proportionally. Loss and receipt of funds occur in an accelerated mode for the user, which saves time.
The amount of investment depends on the Forex company. Some companies offer to make an operation for 1% of the cost to open a position. This tool allows you to work with amounts many times larger than the original size of the investment, which is profitable and convenient.