Margins or boundaries mean limitations, and these are present in every field of life. Sometimes they work as hindrances; but, in Forex trading, these may actually work for you in two ways: they can minimize risk and also earn profits. Forex margin means the amount of money available in your forex account with which you can trade. It is calculated as the difference between the total amount of equity and the amount of margin already used.

To start with forex trading, it is essential that you have the margin account. The best way is to get in touch with a forex broker and open it. This is corresponding to the equities margin accounts of the regular stock market.

To activate a forex margin account, it is necessary to have a deposit amount. This can be arrived at based on an agreement between you and your broker. Forex trading also involves a security deposit that has to be supplied by you. The margin for trading is usually one or two percent. For instance, if you want to trade with 100,000 currency units, you have to have 1,000 in your margin account. This basically works as the security deposit. Your broker supplies the rest of the amount for which he does not charge any interest unless a situation arises wherein you don't close your position on the delivery date. In such a scenario, the interest rates depend on the underlying currency and also your position in the forex trading system.

The broker also plays the role of the initiator of margin calls. This happens if you are on the verge of losing. A margin call denoted that you have to put more money into your margin account. Another option is to close your position, which would minimize risk both for you and your broker.

Forex trading is done on a daily basis. So profits and losses will depend on your position on a particular day. You can opt to be a speculator trader only, but this will not earn you any profits. On the otherhand, if you choose to open an account, you can hold your position for a few minutes or even a few hours. Profits and losses are worked through the margin accounts here. In case of profits, the amount is put into the account; in case of a loss, it is deducted from it.

Forex trading entails a certain amount of risk, but a margin account reduces this. The account also gives a good amount of leverage. So by depositing a small amount of your own money, you can actually earn a lot more. It ensures your position in the forex trading market. It saves you from any major blows and also cements your position. Consequently, you can invest more in the market.

Lucrative as it sounds, forex trading has to be dealt with carefully. More often than not, there are temptations to overspend, but this may spell trouble. It's prudent to take time and settle down well in the market before going for huge investments. Try to be aware of the various nuances of the market. If you can efficiently manage your margin account, then half the job is done. It helps to keep track of your account balance as this will tell you when to cut losses.

Use the margin account effectively. This bypasses the effects of trading in a significant way.