Margin
The minimum amount of money required in your account to open and maintain a leveraged position.
Plain-English Meaning
Margin is like a security deposit required by your broker. When you use leverage to open a large trade, the broker locks up a small portion of your funds to keep the trade open. This locked amount is your margin.
Why It Matters
If your account balance falls below the required margin, your broker may automatically close your trades (a "margin call"). Monitoring available margin is critical to keeping trades open.
Simple Example
If you want to open a $100,000 position and your broker requires a 1% margin requirement, they will lock $1,000 of your account balance as the margin for that trade.
This educational example uses selected assumptions for reference calculation purposes. Real conditions may vary by broker, exchange, or instrument.
Beginner Mistake
Opening too many trades at once, tying up all available margin, leaving no room for standard price fluctuations.