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.
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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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
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
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
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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Definition:
The exact amount of money “locked” when a trade is opened.
Also Called: Entry Margin, Initial Margin
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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
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
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
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
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
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
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
Definition:
When your broker forcibly closes your trades due to low margin level.
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📥 Want a printable version of this cheat sheet?
Click here to download the Margin Jargon PDF
Need more help understanding forex margin or leverage?
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