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what is margin and margin ratio?

LEO

Oct 25, 2021 13:27

Each time you open a new position, a certain percentage of the balance of your account will be withheld as the initial margin for the opening of the new position. The price of the currency pair, your trading volume, and your margin dictate the margin level you need to reserve for each trade. The amount of the margin is usually indicated in the base currency.

Maintenance margin is the minimum margin amount required to maintain the account when you hold the position. 

The margin ratio is equal to the available margin divided by the account equity, and the available margin is the equity minus the margin (used margin) required to establish an existing position.

In top1,If the  margin ratio is less than 50%, the held position will be automatically closed.


Suppose you open a 200:1 leverage or 0.5% margin account.
If you open a mini-lot position with you margin, you don't have to use the full $10,000; you only need to provide an initial margin of $50 ($10,000 × 0.5%=$50).

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