Definition: Margin in forex trading and financial markets refers to the amount of money that a trader must deposit with their broker to open and maintain a leveraged position. It acts as a collateral to cover potential losses and allows traders to control larger positions with a smaller amount of capital.
Understanding and managing margin is crucial for successful leveraged trading. Proper margin management helps traders maximize their potential returns while minimizing risk and avoiding margin calls or forced liquidations. By maintaining adequate margin levels and using risk management strategies, traders can ensure financial stability and sustained trading success.
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