As you dive into the world of margin trading, it may feel like you have to learn an entirely new language to truly understand what’s going on.
Just as with any specialized area, margin trading comes with its own terminology and jargon.
Here’s a handy cheat sheet of the most common terms you may come across in your trading platform.
Margin is the amount of money you are required to deposit with your trading platform in order to order and maintain positions in the forex market.
Margin is used as collateral to ensure you can cover any losses you might incur in your positions.
Leverage is the ability to trade a larger amount with a much smaller amount in your account.
Unrealized P/L is the current profit or loss (P/L) held in your open positions.
- Floating P/L
Balance is the total amount of cash you have in your trading account. If you have an open position, even if it has a floating profit (or loss), your Balance is still the same as before you opened the position.
But once you close the position, the profit (or loss) will be added (or deducted) from the Balance, which will be your new Balance.
- Account Balance