‘Leverage’ allows you to take a position in an instrument using borrowed funds with a relatively small deposit. Leverage helps you magnify the profit or loss you make on a trade.
To open a leveraged position, you need ‘margin’. Margin is the funds required in a trading account to enter a leveraged trade. Think of margin as the collateral required to open a leveraged position.
‘Free margin’ refers to the amount of money in your account which can be used for opening additional leveraged positions. In effect, free margin = funds in your trading account – funds already acting as collateral for current leveraged positions.
Margin requirements can vary depending on numerous factors, including what asset you are trading, the amount of leverage you are using, your trading volume and positions, and other market situations.
Additionally, margin requirements change as the value of your position changes. If your trade moves against you, you may be required to add additional funds into your account to ensure you have the right amount of margin required to keep your positions open.
BlackBull Markets provides our traders with the MT4/MT5 trading platform which provides a continuously updated feed regarding your margin and free margin.
Once your account reaches a margin percentage below 75%, you will receive a margin call.
Once your account reaches a margin percentage below 50% you will be stopped out / liquidated. Meaning your open positions will automatically be closed.
To prevent a stop out more funds will be required, or open positions must be closed.
If further explanation is required, trading guide videos are available on our YouTube channel, or feel free to contact our support team via live chat.
