The Initial Margin at FNmarkets is the amount of money you need to deposit to open a new trading position. It acts as a security deposit to cover potential losses. Here’s a detailed explanation:
Purpose: The Initial Margin ensures you have enough trading capital to cover possible losses on a trade.
How It Works: When you want to open a new trade, you must deposit a percentage of the trade’s total value as the Initial Margin. This amount is set by FNmarkets and depends on the leverage and the asset you are trading.
Example: If you want to trade $10,000 worth of an asset and the required Initial Margin is 5%, you need to deposit $500 to open the trade.
Benefits: The Initial Margin allows you to control larger positions with a smaller amount of trading capital, giving you more trading power.
Risks: If your trade goes against you, your losses can exceed your Initial Margin. Always monitor your trades and ensure you have enough funds to cover any potential losses.
Understanding the Initial Margin helps you manage your trading capital and plan your trades effectively.