Margin – How does it work?
Margin (margin), refers to the level of your funds in the broker’s account, which secures the positions open at a given time. It is expressed in singles at leverage (1:100).
This means that when holding an open position with a leverage of 1:100, you must have 1% of the value of the entire transaction in your account as minimum collateral for your actions. With an investment value of PLN 50,000, you must have a minimum deposit of PLN 500 in your account.
Here it is also worth mentioning that when trading on Forex markets you can very rarely use PLN as a base currency. Therefore, when trading on a pair such as EUR/USD, you must also take the PLN/EUR rate into account when calculating your deposit. Remember, however, that most brokers have automatic calculators that will calculate this for you in a second. The whole scheme is based on a simple currency conversion, so in the case in question the deposit will be PLN 500 : 4.19 (EURO exchange rate) = EUR 119.33 for an investment equal to EUR 11,933.17 (PLN 50,000).
In practice, it is worth remembering to keep your margin at the right level. Remember not to make too large transactions in relation to your capital. A margin level that is too low may result in the closure of our open trades.
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