What is Margin?
Margin is the amount of money required to open or maintain a position. This is not a fee or a transaction cost, it is simply a portion of your account equity set aside and allocated as a margin deposit.
Margin requirements can vary depending on the market you are trading, where you hold your account and the size of your trade. If you do not have sufficient free equity available you will be unable to open a position on the trading platform. The free margin amount shown in the trading platform is the amount you have available to use should you wish to open additional positions.
Margin is normally expressed as a percentage of a position size (e.g. 33.3%). Margin can be calculated using the following formula:
Margin Requirement = (current market price x volume) / account leverage
EUR/USD is quoted at the current market price of 1.18158, your account has a leverage of 1:30 and you would like to trade one standard lot.
Your margin calculation would be: (1.18158 x 100,000) / 30 = $3938.60
In this example, the margin on this position would be $3938.60. Therefore, in order to open a position of this size, you would require at least $3938.60 in free equity in your trading account.