What Is a Margin and Leverage

What Is a Margin


Margin is deemed as the deposit needed when a trader enters the market to keep positions open. It is not a transaction fee, rather it is a tiny piece obtained from trading accounts equity. Margin requirements are established by HQBroker by taking a percentage of the estimated trade size plus a little bit of safeguard.

About Leverage


Leverage is a vital tool for investors; it allows them to raise their market exposure to a point that goes beyond the initial investment. Given that an investor opens an account with margin requirements, he will have to trade on margin to let him open trades that are larger than the initial capital.

HQbroker offers a versatile selection of leverage ratios up to 1:400, depends on trading form. Those who trade with a high leverage ratio can either gain big profits or end up with a negative balance. For that reason, it is imperative that a trader is familiar to the proper usage of leverage and the risks that come with it when trading on margin.

Margin Call & Stop Outs


Margin calls and stop outs are used for improving risk management strategies which controls the possibility of having a negative account balance. When trading on leverage, a trader uses borrowed funds from the broker to trade at higher levels. Margin calls and stop outs come into the picture since the capital placed to the account is used as collateral on which the loan is rooted.

The margin call initially informs the trader that the account margin point is reaching the minimum level. A stop out occurs when the account balance is below the margin call, compelling the trading platform to automatically end opened positions.


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