The amount of capital a trader must deposit to open and maintain a leveraged position. It acts as a security deposit that ensures the trader can cover potential losses. Margin allows traders to increase exposure but also increases risk. If losses exceed available equity, a margin call may occur, requiring additional funds or leading to forced liquidation. Monitoring margin levels is crucial for maintaining trading positions and avoiding unexpected account depletion. Margin requirements vary across brokers, instruments, and regulatory jurisdictions.
Example:
For example, with 10:1 leverage, a $1,000 margin can control a $10,000 position.
