What is margin in trading?
In one line: Margin is the money your broker sets aside from your account as a deposit to keep a leveraged trade open.
A simple example
You want to buy one mini Lot of EUR/USD, 10,000 euros, at 1.0800. That's a position worth about $10,800.
With 50:1 Leverage, the margin is $10,800 ÷ 50 = $216. Your broker locks that $216 while the trade is open. The rest of your account is "free margin," money you can still use.
Margin is a deposit, not a fee. When you close the trade, it comes back to your free balance, plus or minus whatever the trade made or lost.
What a margin call is
If trades move against you, your account value falls. When it drops close to the margin you have locked up, the broker warns you. That's a margin call.
If it keeps falling, the broker can close your trades for you, often at the worst moment. This is called a stop-out. Each broker sets its own levels, so read the rules on yours.
Why it matters
Margin decides how many trades you can open. It says nothing about how much you should risk. Those are different questions.
A trader with a $1,000 account could open trades using $900 of margin. One sharp move and the broker starts closing them. A trader risking 1% per trade, with a Stop loss on every position, almost never gets near a margin call.
A common mistake
Thinking margin is the most you can lose. It isn't. On the example above, $216 is locked, but your loss depends on how far price moves. A 100-Pip move on a mini lot is about $100, and a bigger move costs more.
Your real risk is the distance to your stop times your size. Work that out with the position size calculator, and see leverage and margin explained for more examples.
Keep most of your account as free margin. If one trade needs a big share of your balance, the trade is too big.
Questions
Is margin money I owe the broker?
No. It's part of your own money, held aside while the trade is open. It's released when you close.
How do I avoid a margin call?
Risk a small slice per trade, use a stop on every trade, and don't open many trades at once. Then losses stay far from your margin levels.
Is stock margin the same as forex margin?
The idea is similar, a deposit against a bigger position, but the rules and limits differ. Stock margin accounts borrow money and can charge interest.
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