What is Margin in Forex Trading?

Margin is the amount of money that you need to place a trade. It varies by the broker and is based on several factors, including currency pair volatility and liquidity.

The higher the volatility and lower the liquidity, the higher the Forex margin. Brokers want to encourage free trading, but they also have to balance their customers’ credit risk. Because of this, trading with small amounts of margin involves high leverage.

While the Forex market is a liquid financial market, it can still experience periods with low liquidity, such as bank holidays and weekends. During these periods, the cost of trading increases dramatically. Forex margin trading is not for novice traders; you should know your limitations before investing large sums of money.