Margin
When you open a leveraged position, the broker sets aside part of your balance as margin. It is not a fee — it returns when the position closes — but while locked it is unavailable for other positions.
Free margin (equity minus locked margin) is the buffer that absorbs open losses. When it runs out, the broker begins closing positions to protect the loan: the margin call or stop-out. Monitoring margin usage is part of running any automated system safely.
Covered in depth in Lesson 03: Risk management before anything else.
Related terms
- Leverage — Borrowed buying power from the broker that lets a small deposit control a much larger position.
- Margin call / stop-out — The broker's forced closing of positions when account equity can no longer support the open margin requirement.
- Equity curve — The plot of account value over time — including open positions — that shows a strategy's character at a glance.
Get new lessons by email
Occasional, plain-language lessons on automated trading — the same tone as everything on this site. No signals, no promises, unsubscribe anytime.
- One plain-language lesson at a time — no jargon, no hype.
- The full curriculum as a printable field guide.
- No signals, no performance promises. Unsubscribe anytime.
We store your address to send you educational content and nothing else. See the privacy policy.