Margin is the amount of money a trader needs to deposit in a trading account to open a position or maintain an existing position. Margin is similar to money down to secure a loan or credit card. By putting down a set amount of money, a trader can borrow many times more that amount to trade currency.
With forex margin accounts offering leverage of up to 400 to 1, a trader can multiply the value of a trade many times over. For example, $1000 margin in an account with a more "modest" 50:1 leverage will allow the trader to control a position worth $50,000. If, however, the value of the position drops too much, the trader will receive a margin call and be required to add more money to the margin to keep the position open.
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