Forex Margin

Margin is essentially a loan that is provided by your forex market maker.

You are going to receive a loan from your market maker or your forex broker for more money than what you have in you account.  So in order to do this your forex broker is going to need a deposit.

In retail forex the normal margin is 1%, but there are forex broker that allow for 0.5%, 0.25% and others that are higher at 2% - 5%.

A forex trader must calculate the margin required as a percentage of the lot / transaction value. (Not all brokers have fixed lot sizes. With some you can trade any transaction size as small as $1.00 up.

Your margin will always be the agreed percentage of the value of the transaction that you make.

Retail forex brokers always quote the industry convention namely eurusd (i.e. eur in terms of usd). That means a 10K eurusd transaction = EUR10,000 and that is if eurusd value = 1.4000 = $14,000. Your 1% margin required will be 1% of $14,000 = $140.00.

The following is very important:

Forex Traders must calculate your risk not by using margin required percentage but by looking the leverage and the risk associated with actual trade.