If I open a leveraged position and the margin is 100$, are those 100$ added back to my account balance when I close the position?
Yep yep - look at margin as a deposit to open a trade.
Typically margin is higher in more volatile derivatives, and can increase for over night positions.
Margin is removed from your available account balance - in theory you can lose your entire balance and you would just be left with the margin which was required to open the trade.
(in simple terms of course) - there are calculations behind all of this in reality.
Simple answer is yes.
More precise answer is that margin never decreases your balance so it cannot be added back.
It certainly decreases your available balance to open new positions.
nope,
it does not decrease balance, balance consist of closed trades and deposit and withdrawals
it does decrease free margin though which is limiting your possibiliity to open new trades
I said available balance - hence what can be used to open new trades. Not your gross balance which includes ‘used margin’.
Then define available balance versus balance
it’s quite clear, hence ‘available’
To avoid any confusion - this is from the school here, which might help.
Nothing like available balance does exist
There is
Balance which I defined above
Margin which shows the margin requirement used to open position
Free margin which defines possibility of opening new positions
And equity which simply shows balance plus/minus open trades
Thats it
Yes that is called free margin
NOT available balance
If you are trying to help a newbie why do you confuse him instead?
ahh togr, lets take a step back and see where your confusion is, shall we?
‘Available account balance’ / ‘free margin’ are interchangeable terms - they both take into account margin tied up in trades. It’s a common phrase used in all FX forums and education books. If you don’t like it then that’s ok, it’s also not my problem and it’s not something i’m going to argue the toss over.
For the sake of your benefit I will edit all posts to ‘free margin’
someone should argue, toss or not toss
otherwise new members will imagine Tgor knows something!
To be fair - ‘free margin’ is correct - but it’s also very clear for a person with at least some intuition that ‘available account balance’ is one of the same in all aspects. It’s an openly used term that is about as open as retail traders saying that you’re actually buying & selling, when in reality you’re not. It’s easy to be awkward, but no need really.
Thanks guys. And just to make sure, my stop loss placement has nothing to do with margin? For example if I put my stop loss somewhere where if would cause a bigger loss than the margin for that position, that’s ok?
The size of the required margin will be a factor of your position size, which should be a factor of your Stop Loss vs risk to take on the trade as a % of your account balance. In some instances the broker will determine just how much margin is required to open a trade, it’s not always identical for the same derivative [currency pair] on varying platforms.
Have a look here - it explains leverage, margin and balance and the relationships
This is more of a theoretical question, I don’t plan to risk that much, but I would like to know what if I risk a more than the margin is, will I be stopped automatically just because of that?
For a newbie you need to be precise