You use margin to create leverage.
Leverage allows you to trade positions LARGER than the amount of money in your trading account.
Leverage is the ratio between the amount of money you really have and the amount of money you can trade.
When a trader opens a position, they are required to put up a fraction of that position’s value “in good faith”. In this case, the trader is said to be “leveraged”.
The “fraction” part which is expressed in percentage terms is known as the “Margin Requirement”.
16
50 reads
CURATED FROM
Learning Forex (Preschool) - Margin Trading 101: Understand How Your Margin Account Works
babypips.com
17 ideas
·1.38K reads
IDEAS CURATED BY
I want to make summary of what I have learned about Forex so that I can refresh it again.
“
Similar ideas to The Relationship Between Margin and Leverage
‘Margin of safety’ is the difference between a stock price and its intrinsic worth, or value.
So if a stock is trading at $70 in the market, and you calculate the company’s intrinsic value as $100, you have a margin of safety of $30 (100 minus 70). In other terms, the sto...
Read & Learn
20x Faster
without
deepstash
with
deepstash
with
deepstash
Personalized microlearning
—
100+ Learning Journeys
—
Access to 200,000+ ideas
—
Access to the mobile app
—
Unlimited idea saving
—
—
Unlimited history
—
—
Unlimited listening to ideas
—
—
Downloading & offline access
—
—
Supercharge your mind with one idea per day
Enter your email and spend 1 minute every day to learn something new.
I agree to receive email updates