Forex Margin Trading

When a private investor who purchases, let’s say: GBP/USD have to put down a deposit known as ”margin”, this is required rule. Also the sale of one currency involves the purchase of another, the seller of GBP/USD will have bought a volume of USD and will also have to put down margin.

What percent could it be? The normal margin requirement is between 1% and 5% of the underlying value of the trade. Here is an example: If your margin requirement is 2.5% of the 5,000 USD in your margin account, you can open a positions worth 200,000 USD. You may be asked to provide additional funds, when the funds in your margin account drop below the minimum required to support your open positions. This is well known as a ”margin call”.