What is Margin Requirement?
Margin is expressed as a percentage (%) of the “full position size”, also known as the “Notional Value” of the position you wish to open.
Depending on the currency pair and forex broker, the amount of margin required to open a position VARIES.
You may see margin requirements such as 0.25%, 0.5%, 1%, 2%, 5%, 10% or higher.
This percentage (%) is known as the Margin Requirement.
Here are some examples of margin requirements for several currency pairs:
|Currency Pair||Margin Requirement|
What is Required Margin?
When margin is expressed as a specific amount of your account’s currency, this amount is known as the Required Margin.
EACH position you open will have its own Required Margin amount that will need to be “locked up”.
Required Margin is also known as Deposit Margin, Entry Margin, or Initial Margin.
Let’s look at a typical EUR/USD (euro against U.S. dollar) trade. To buy or sell a 100,000 of EUR/USD without leverage would require the trader to put up $100,000 in account funds, the full value of the position.
But with a Margin Requirement of 2%, only $2,000 (the “Required Margin“) of the trader’s funds would be required to open and maintain that $100,000 EUR/USD position.
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