Ever heard the phrase "trading on margin" and wondered what it actually means? Well, imagine being able to control a much larger trade size than your account balance allows. It might sound like a shortcut, but it comes with real risk. That’s margin trading in a nutshell! But before you dive in, let’s break it down so you fully understand how it works, the risks, and how to use it wisely.
Margin 101: The basics
Margin is the amount of money you need to deposit to open a leveraged position. It’s like a security deposit that lets you trade larger-than-normal positions than your actual funds. Brokers (like Deriv) lend you the extra capital, but you’re responsible for any profits and losses.
Let’s say you want to open a 1,000 USD trade with a 1:100 leverage. Instead of paying the full 1,000 USD, you only need 10 USD (your margin) to enter the trade. If the market moves in your favour, your profits are magnified. However, if it goes the other way, losses are amplified too.
Margin vs leverage: What’s the difference?
| Margin | Leverage |
|---|---|
| The amount of money you need to open a leveraged trade. | A ratio that determines how much buying power you have relative to your margin. |
| Expressed as a percentage (e.g., 1% margin requirement). | Expressed as a ratio (e.g., 1:100). |
| Affects how much capital you must commit per trade. | Determines how much your position size is multiplied. |
Think of leverage as the power boost and margin as the fuel that makes it happen!
Types of margin in trading
| Initial Margin | The upfront deposit required to open a trade. |
|---|---|
| Maintenance Margin | The minimum balance needed to keep your trade open. If your funds drop below this, you may face a margin call. |
| Margin Call | A broker’s way of saying, “Hey, your account is running low! Add more funds or risk your position being closed.” |
Managing margin risk like a pro risk management strategies
Since trading on margin can magnify both gains and losses, managing risk is crucial. Here’s how:
Use stop loss orders. Set an automatic exit point to prevent excessive losses.
Don’t max out your leverage. Just because 1:1,000 leverage is available doesn’t mean you should use it all.
Monitor your margin level. Keep an eye on how much available margin you have left to avoid margin calls.
Diversify your trades. Don’t put all your funds into one high-risk trade.
Where can you trade on margin trading platforms?
On Deriv, you can trade on margin across multiple markets:
| Market | Leverage |
|---|---|
| Forex | Up to 1:1000 |
| Stocks & Indices | Up to 1:100 |
| Cryptocurrencies | Up to 1:100 |
| Commodities | Up to 1:500 |
| Derived Indices | Up to 1:6000 |
Each market has different risk levels, so choose wisely based on your trading experience.
You can trade with margin across major markets on Deriv using our Deriv MT5 and Deriv cTrader platforms. Check out our free courses on Deriv Academy to learn more about leverage and trading CFDs or try it out on a practice demo account.
Викторина
Если вы откроете сделку на $5 000 с кредитным плечом 1:50, какой маржинальный депозит вам потребуется?
Часто задаваемые вопросы
