Initial Margin

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Definition of 'Initial Margin'

The Initial Margin is the amount set aside from your account when you place a trade. This amount provides a buffer against a loss on your position and protects the broker and clearing house from carrying a loss should your trade not succeed.

If the position moves against you then your broker may make a Margin Call for additional funds if your Maintenance Margin falls below a certain level.

The relationship of the Initial to Maintenance Margin is often 2 to 1. In other words, if you require 50% to enter a position then your account needs to maintain 25% to keep the position open.

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