Published by DailyForex.pk – Your Ultimate Forex Guide in Pakistan
Understanding margin terminology is essential for every forex trader, especially if you’re just starting out. To help you trade smarter, here’s a comprehensive cheat sheet of common margin terms used in forex trading – all explained in simple, beginner-friendly language.
📘 1. Margin
Definition:
Margin is the amount of capital you need to deposit in your trading account to open and maintain forex positions. It acts as collateral for your trades.
Keywords: forex margin in Pakistan, what is margin in forex
📘 2. Leverage
Definition:
Leverage allows you to control a larger position with a smaller amount of your own money. It amplifies both potential profits and losses.
Example:
With 100:1 leverage, you can trade $100,000 with just $1,000.
Keywords: forex leverage explained, high leverage forex brokers Pakistan
📘 3. Unrealized P/L (Floating P/L)
Definition:
The profit or loss from open trades that has not been closed yet.
Also Called: Floating Profit/Loss
Keywords: floating P/L meaning, unrealized profit in forex
📘 4. Account Balance
Definition:
The amount of money in your trading account. This does not include profits or losses from open trades.
Also Called: Account Cash, Trading Balance
Keywords: forex account balance, balance vs equity forex
📘 5. Margin Requirement
Definition:
The percentage of the total trade size that must be held as margin.
Example:
For a $10,000 trade with a 2% margin requirement, you need $200.
Formula:Required Margin = Notional Value × Margin Requirement
Keywords: margin requirement forex, required margin calculator
📘 6. Required Margin
Definition:
The exact amount of money “locked” when a trade is opened.
Also Called: Entry Margin, Initial Margin
Keywords: required margin in forex trading, forex initial margin
📘 7. Used Margin
Definition:
Total margin currently used for all open trades. It cannot be used to open new trades.
Keywords: what is used margin, forex trading margin usage
📘 8. Equity
Definition:
Your real-time account value, including balance and floating profit/loss.
Formula:Equity = Balance + Floating P/L
Keywords: equity in forex account, equity vs balance forex
📘 9. Free Margin
Definition:
The amount of margin you can still use to open new positions.
Formula:Free Margin = Equity - Used Margin
Keywords: free margin forex explained, usable margin forex
📘 10. Margin Level
Definition:
Shows the ratio of your Equity to Used Margin, displayed as a percentage.
Formula:Margin Level = (Equity / Used Margin) × 100
Keywords: margin level indicator, margin level calculator forex
📘 11. Margin Call Level
Definition:
A preset percentage (e.g. 100%) where if your Margin Level falls below it, your broker will issue a Margin Call.
Keywords: what is margin call level, margin call alert forex
📘 12. Stop Out Level
Definition:
If your Margin Level falls to this level (e.g. 50%), your broker automatically closes your trades to protect you from a negative balance.
Keywords: stop out level in forex, stop out meaning
📘 13. Margin Call
Definition:
A warning that your margin is low and you must add funds or close trades. Your positions remain open, but you can’t open new ones.
Keywords: forex margin call meaning, margin call risk management
📘 14. Stop Out
Definition:
When your broker forcibly closes your trades due to low margin level.
Keywords: stop out forex broker Pakistan, forex trade liquidation
💡 Download This Guide
📥 Want a printable version of this cheat sheet?
Click here to download the Margin Jargon PDF
Need more help understanding forex margin or leverage?
Explore our Forex Education Hub on www.dailyforex.pk for daily tutorials, trading tips, and Pakistan’s most trusted forex news.