Just recently realized that many people are still confused about margin. Let me share my understanding.

Simply put, margin is the collateral you need to have in your account to open a trading position. It is not a fee or cost, but the amount of money that the broker will "lock" in your account. For example, if you want to control a position of $100,000 and the broker sets an initial margin rate of 1%, the broker will hold $1,000 as collateral. This means you are controlling a $100,000 position with only $1,000.

When you close the trade, this collateral will be "released" back into your account, ready for the next trade.

The way to calculate margin is straightforward: the contract value multiplied by the margin rate. If you open with 200:1 leverage (0.5% margin) and open a mini lot of $10,000, you only need $50 as collateral (10,000 × 0.5% = 50). That’s the power of leverage.

But there’s another important concept: maintenance margin, which some call "free margin." This is the minimum amount you must keep in your account to keep your position open. Usually, the maintenance margin is about 50% of the initial margin.

If you pay $1,000 in margin, your equity must be at least $500. If your trade incurs a loss and your equity drops below this level, the broker will issue a "Margin Call" asking you to add funds, or they may close your position without permission.

In summary, roughly speaking, margin is the collateral for opening a position. Maintenance margin is the minimum amount to keep the position open. Both are linked to leverage: the higher the leverage you use, the larger your profits and losses become. Therefore, understanding margin is a crucial part of risk management, not just a tool to amplify gains.