Good answer there.

IF you want to get in depth with Forex Trading though, you might want to go with the nation’s #1 resource,. It’s packed with a lot of stuff, so plan to take a lot of time going over the information, and you probably will have to purchase a course to really get deep into it, but the #1 courses are listed there as well. take care.

I don’t trade currency, but here is how that margin requirement works:

1) You have $12k in the account.

2) You make a $20k investment:
$12k your money + $8k margin
margin % = $8k/$20k = 40%

3) investment drops to $10k
$2k your money + $8k margin
margin % = $8k/$10k = 80%

Now you are only risking $2k of your money and $8k of your brokers. This means they are taking more risk than you are, so that is why they don’t like it. They are that much closer to losing the money that you borrowed from them.

At 10% margin, the investment must lose 90% before the broker loses money. At 90% margin, the investment must lose 10% before the broker loses money.

Taken to the extreme, 99% margin means that your broker has $99 at risk for each $1 that you put up, yet the equity still covers them. Would you lend money at that risk? Some stupid greedy bankers did and got burned when people put zero down on houses and walked away when the house prices dropped.