What is margin trading? How does it work? Margin trading allows traders to borrow funds, using their own assets as collateral, to open positions exceeding their account balance. It is closely related to leverage. Margin refers to the collateralized funds, while leverage refers to the multiple of the position size. There are two main types of margin allocation: 🟣 Cross-margin: Uses the entire account balance as collateral. While the liquidation price will be far from the entry price, the risk is also greater. 🟣 Individual margin: Uses only a portion of the collateral, limiting losses to that amount. In addition, there are two other key types of margin to understand: 🟣 Initial margin: The amount required to open a leveraged position. 🟣 Maintenance margin: The minimum equity required to maintain the position. Falling below this value will trigger a margin call or forced liquidation. 📘 Click here to learn more about margin and other key leveraged trading terms: