Margin
A deposit required to open and maintain a position, such as a forward contract or option. Margin serves as collateral to secure the transaction and protect against counterparty default risk.
Related terms
Initial Margin
The deposit required to open a position, usually expressed as a percentage of the total trade value. A trader seeking £100,000 of FX exposure might post £10,000 as a 10% initial margin requirement while still gaining the full exposure.
Read full definitionMargin Call
A request for additional funds when an open hedging position moves against you and its mark-to-market loss exceeds the collateral already posted. It restores the required security buffer.
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Funds traders must hold in their accounts to maintain the required margin necessary to cope with market fluctuations.
Read full definitionLeverage
The use of borrowed capital, such as margin, to increase the potential return of an investment. In FX it allows traders to open a much larger position with a smaller amount of actual capital.
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Aggressive
A description of traders and/or price action acting with conviction.
Read full definitionArbitrage
The simultaneous buying and selling of the same currency in different markets to profit from small price differences. The strategy exploits temporary inefficiencies in FX markets.
Read full definitionAt Best
An instruction given to a dealer to buy or sell at the best rate that can be obtained at a specific time.
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An instruction given to a dealer to buy or sell at a specific price or better.
Read full definitionBroker
A third party coordinating the sale of financial securities between sellers and buyers. Exchanges only accept orders from their members, so traders and investors use brokers as intermediaries; brokers are compensated through commissions, fees or payment from the exchange.
Read full definitionBulls
Traders who expect prices to rise and who may be holding long positions.
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