Community Forex Questions
What is maintenance margin?
The amount of capital that must be available in your account to keep a leveraged trade open is known as the maintenance margin, also known as the variation margin. It ensures that you always have enough money to fund the position's present value and cover any running losses.
A certain amount of money must be paid and kept in your account to keep a leveraged position open. If your position begins to lose money, your deposit may no longer be sufficient to keep the trade open. In this case, your broker will request that you deposit additional funds in order to balance your account. This is referred to as a margin call.
A certain amount of money must be paid and kept in your account to keep a leveraged position open. If your position begins to lose money, your deposit may no longer be sufficient to keep the trade open. In this case, your broker will request that you deposit additional funds in order to balance your account. This is referred to as a margin call.
Maintenance margin refers to the minimum amount of equity an investor must maintain in their margin account to uphold a leveraged position. It acts as a safeguard for brokers against potential losses in the event of a market downturn. When the value of securities held as collateral drops, the maintenance margin ensures that the investor has sufficient funds to cover potential losses or additional margin requirements. If the equity falls below the maintenance margin level, the broker issues a margin call, prompting the investor to either deposit more funds or liquidate assets to restore the required equity level and mitigate further risk.
Sep 26, 2022 20:50