Margin Jargon Cheat Sheet – Complete Glossary for Forex Traders

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.

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📘 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.

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📘 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

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📘 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

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📘 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

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📘 6. Required Margin

Definition:
The exact amount of money “locked” when a trade is opened.

Also Called: Entry Margin, Initial Margin

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📘 7. Used Margin

Definition:
Total margin currently used for all open trades. It cannot be used to open new trades.

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📘 8. Equity

Definition:
Your real-time account value, including balance and floating profit/loss.

Formula:
Equity = Balance + Floating P/L

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📘 9. Free Margin

Definition:
The amount of margin you can still use to open new positions.

Formula:
Free Margin = Equity - Used Margin

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📘 10. Margin Level

Definition:
Shows the ratio of your Equity to Used Margin, displayed as a percentage.

Formula:
Margin Level = (Equity / Used Margin) × 100

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📘 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.

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📘 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.

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📘 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.

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📘 14. Stop Out

Definition:
When your broker forcibly closes your trades due to low margin level.

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💡 Download This Guide

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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.

Hamza Shah