Margin

Margin is the amount of your own money that a broker requires you to set aside to open and maintain a leveraged trade. It is not a fee, but a risk buffer. If losses reduce your available margin too far, the broker can require more funds or close your positions automatically, making margin rules a key factor in broker selection.

In plain terms, margin is the portion of your account balance that is locked up as security when you use leverage. It allows you to control a larger position than your cash balance alone would permit. While the trade is open, this margin cannot be used for other trades, and it helps protect the broker against losses if the market moves against you.

Margin determines how much exposure you can take and how much room your trades have to fluctuate before forced action occurs. Traders who misunderstand margin often focus only on leverage and ignore how quickly margin can be consumed during adverse price moves. This matters for both short-term and longer-term strategies, as margin pressure can force trades to close even if the original trade idea remains intact.

Margin policies differ materially between brokers and are closely linked to regulation and risk management. When comparing brokers, users should examine:

• Initial and maintenance margin requirements by asset class.

• Margin call and stop-out levels (for example, at what equity percentage positions are closed).

• Whether margin requirements increase during volatility or around market events.

• Transparency of margin calculations in the platform.

• Availability of negative balance protection.

From a comparison and monetisation perspective, margin is a strong decision driver because tighter or less transparent margin rules can increase the likelihood of forced closures. This content naturally supports links to broker reviews and comparison pages where margin policies are laid out side by side.

• Opening positions that consume too much available margin, leaving little buffer for normal price fluctuations.

• Ignoring how spread widening and slippage increase margin pressure.

• Holding leveraged positions through volatile periods without accounting for potential margin increases.

• Assuming margin calls will always give time to act—automatic stop-outs can occur without warning.

• Choosing brokers with unclear or aggressive margin close-out policies.

Risk note: margin trading amplifies both gains and losses. Rapid market moves can reduce equity quickly, triggering forced closures at unfavourable prices.

You deposit £5,000 into a trading account and open a leveraged position that requires £1,000 in margin.

• £1,000 becomes used margin and is locked while the trade is open.

• The remaining £4,000 is free margin available to absorb losses.

If the trade moves against you and your unrealised loss reaches £3,500, your equity drops to £1,500. At this point, free margin is minimal. If losses continue or margin requirements increase, the broker may close the position automatically to prevent further losses.