Many people are confused that margin is the cost of trading, but in reality, it is not money that is lost or a fee. Margin is the collateral that the broker sets aside from your account to allow you to open trading positions.

Imagine you want to control a trading position worth $100,000, but you don't have to use all the money. The broker will only set aside $1,000. This number is called the margin, which is a part of your account that is locked as long as the position remains open. When you close the trade, this amount will be released back.

The calculation method is very simple: Margin = Contract value × Margin ratio. For example, if you open with 200:1 leverage (0.5% margin) and open a mini lot of $10,000, you only need a margin of $50 ($10,000 × 0.5%).

But there is another equally important concept: the maintenance margin, also called "free margin." This is the minimum amount of money that must remain in your account to keep the position open. Generally, it must be at least 50% of the initial margin.

The formula is: Maintenance margin = Contract value × (Margin ratio × 50%).

Going back to the previous example, if you pay an initial margin of $1,000, you need to keep at least $500 in your account. If your trade starts to lose and the funds fall below this level, the broker will issue a "Margin Call," asking you to add more funds.

What you need to understand is that margin is a tool that amplifies both profits and losses. The higher your leverage, the more margin you need. But the risk also increases. If the trade moves against you, this collateral may not be enough, and you could lose all your money.

In short: Margin is the security deposit required to open a position. The maintenance margin is the minimum amount that must be kept in the account to keep the position open. Both are related to leverage; the higher the leverage, the greater the risk.