<Last updated 25.04.2020>
Hi! If you are interested in online trading you should read the below that provides important explanation of what is margin required and the difference from leverage.
What is Margin Required?
You can buy 100,000 EUR with a deposit of just 1000 EUR (margin required). When you decide to close a position, the deposit that you originally made is returned to you and a calculation of your profits or losses is done.
Leverage will determine the margin required, the deposit, also known as “margin “. Is the account denomination currency important? Yes.
Example: The account leverage is 1:100. This means that when trading 100,000 EUR, if your account is in EUR you need only 1000 EUR as margin > Leverage allows you to buy 100,000 with just 1000 Eur. So the margin required to open a 100,000 position is 1000. As a percentage, the margin requirements will be 1000/100,000 = 0.01 or 1%.
When trading CFDs you have to be careful of margin requirements. when trading specific asset classes leverage is not taken into account. However, only Margin Requirement setting will be taken into account. You can access this information when reading the contract specifications.
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