However, for those that are new, they need to understand that in margin trading as opposed to other financial markets where you will require making full deposit of the amount traded, in the Forex market you will need only a margin deposit. The rest will be given by your broker; however, interest rates are applicable on such lending and if there is going to be any adverse losses you will be still required to pay your dues.

The leverage that is given by some brokers can be as high as 400:1.  This suggests that you will have to make a initial deposit of only 1/400 of the money required for purchasing the security. In other words, you will be paying only or 0.25% as a deposit in balance to open a position and you will have to make a maintenance margin to meet with the floating gains/losses.

There are many brokers that give 100:1, where each trader will have to make 1% in balance to open a position for the securities that they are purchasing.

• The standard lot size employed in Forex market is $100,000 USD.
 
For example, a trader that requires to get a long position of one lot in EUR/USD and they are willing to use 100:1 leverage, then to open this position it is enough if they have 1% in balance or $1,000 USD in the account.

However, it is not advisable to open a position with such frugal funds in our trading balance. This can be advisable if the trade is going to be profitable; however, if the trade goes against the trade the position will be closed by the broker and this will take us to
margin call; a margin call happens when the balance of the trading account drips below the maintenance margin.

This is because due to adverse trading situation the capital that is required to open one position would have been used up for the loss and you will have to deposit money enough to make up for the 1% when the leverage used is 100:1 and 2% when leverage used is 50:1, and so on.

At this situation of loss, the broker will sell off the buy back in the case of short positions on all your trades and you will be left with just the maintenance margin. When money management is not properly applied margin calls apply and you should still pay the interest rate for the money you borrowed for margin trading.