What is Forex Margin Account? - What is Forex Margin Level?

How to Calculate Leverage and Margin - Margin Level - Forex Margin Level Percent Calculator

The definition of Leverage is having the ability to control a large amount of money using very little of your own money and borrowing the rest - this is what makes the forex market to attract many investors.

We shall explain forex leverage first and then explain forex margin in this learn how to calculate forex leverage and forex margin tutorial.

Example:

We shall us this example to explain what forex leverage is? If your broker gives you forex leverage of 100:1 (this is the best option to select as a maximum for any account)

This means you borrow 100 dollars for every dollar you have in your forex account.

To put in another way your broker gives you 100 dollars for every 1 dollar in your forex account. This is what is referred to as forex trading leverage.

This means if you open an account with $1,000 and your forex leverage is 100:1, then you will get $100 for every $1 you that you have in your account, the total amount which you will control is:

If for 1 dollar the broker gives you 100

Then if you have 1,000 you'll get a total of:

$1,000 * 100 = 100,000 dollars

Now you control 100,000 dollars of Investment

Most new forex traders ask what forex leverage is best forex leverage for 1,000 dollars, or 2,000 dollars, or 5,000 dollars forex account? - The best forex leverage option to select when opening a live forex account is always 100:1 and not 400:1.

What is Forex Trading Margin?

This is the amount of money required by your online broker so as to allow you to continue trading with the borrowed amount.

In other words the question what is forex margin in Forex? can be described as the money required to cover open forex trades & is expressed in percentage. For 100:1, the amount you will control is 100,000 dollars as explained in the above example.

Now can you compare someone investing $1,000 with another one investing $100,000? Obviously Not. This is how it works, it takes you from that guy investing $1,000 to that one investing $100,000. Where does this extra money come from? You borrow from your forex broker in what is simply known as Leverage. This money that you borrow, you borrow it against the $1,000 dollar of your own money that you deposit with your forex broker. If you were to explain what this forex leverage means - then it's the ability to control a large amount of money using very little of your own money & borrowing the rest. Otherwise, if you were trade Forex without this forex leverage it would not be as profitable as it is, in fact you can still select not to use forex leverage, using the 1:1 option but you would not make money it would take too long to make any profit.

Example of how to calculate forex leverage and forex margin:

Margin required in this case is 1,000 dollars (your money) if it is expressed as a percentage of 100,000 dollars which you control it is:

If leverage = 100:1

1,000 / 100,000 * 100= 1%

Margin required = 1%

(1/100 *100= 1%)

"TradeForex Trading - Please simplify because I am Beginner'

(Simplify - your capital is $1,000 after forex leverage you control $100,000 - $1,000 is what percent of $100,000 - it's 1%) that is your forex margin requirement for your forex account.