How do margins work in leveraged trading?

Margins serve as collateral for leveraged trades. The required amount depends on position size, leverage, and instrument volatility. In essence, margin allows traders to control a position that is significantly larger than the amount of capital they actually deposit — the leverage ratio determines how much larger that exposure can be relative to the margin provided.

For example, if a trader wants to open a position worth €10,000 with 1:10 leverage, only €1,000 of margin is required as collateral. The remaining exposure is effectively provided by the platform's leverage mechanism. While this structure makes trading more capital-efficient and allows participation in larger market opportunities, it also means that both profits and losses are calculated on the full €10,000 position value — not just the €1,000 deposited. This amplification effect is the core reason why leveraged trading requires careful risk management.

As the market moves, the trader's margin level changes in real time. If the position moves in the trader's favour, available margin increases. If the market moves against the position, available margin decreases. If it falls below the maintenance margin level, the platform may issue a margin call, requiring additional funds, or automatically close some or all open positions to prevent further losses. This mechanism protects both the trader and the platform from excessive risk. To trade leveraged instruments responsibly, traders should monitor their margin levels continuously, avoid over-leveraging their accounts, and use tools such as stop-loss orders to define clear exit points before adverse movements consume their available collateral.