What is Margin in Trading and How Does it Work?

Margin is the amount of capital required to open and maintain a leveraged trade. It allows traders to control a much larger position than the funds they have available, making it a key concept in leveraged trading environments like Pivex.

At Pivex, all trading takes place with simulated capital through the MatchTrader platform. While you’re not risking real money, margin rules are still enforced to help you build disciplined habits and manage risk properly, just like in a real market.

How Margin Works

When you open a position, a portion of your account equity is allocated as used margin. This acts as a security buffer in case the market moves against your position.

For example:

If you’re trading 1 standard lot (100,000 units) of EUR/USD at a price of 1.1000 with 50:1 leverage, your required margin would be:

100,000 × 1.1000 = $110,000-total position value

100,000 ÷ 50 = $2,000-the required margin with 50:1 leverage

 
So you only need $2,000 in your account to control a $110,000 position.


Key Margin Terms

• Initial Margin: The amount needed to open a new position. It depends on the leverage and instrument.
  
• Used Margin: Margin currently tied up in open trades.
  
• Free Margin: Equity available to open new positions.
  
• Equity: Your balance plus or minus any unrealized P/L from open trades.
  
• Margin Level (%): Equity ÷ Used Margin × 100 — an indicator of your risk exposure.

Margin Call and Stop-Out

If your equity drops too low compared to your used margin:

• Margin Call: A warning that your equity is close to the minimum requirement. At Pivex, support may flag you for risk mismanagement.
• Stop-Out: If your margin level falls below a critical threshold (set by MatchTrader), your trades may be closed automatically to prevent further losses.
  
  

Risks of Margin Trading

Even in a simulated environment like Pivex, it’s crucial to follow proper margin and leverage rules:

• Amplified Losses: With leverage, small price movements can result in large losses.
  
• Overleveraging: Taking oversized positions can lead to margin breaches and account termination.
  
• Volatility Impact: Spikes in price can reduce your equity quickly and trigger stop-outs.
  
  

How to Manage Margin Wisely

• Use Stop-Loss Orders: Protect your trades from large losses and preserve margin.
  
• Keep Margin Utilization Low: Avoid using more than 20–30% of your equity at once.
  
• Understand Your Leverage: Higher leverage means a smaller margin but greater risk.
  
  
  

Margin at Pivex

At Pivex, you can practice responsible trading using simulated funds, but margin logic is fully enforced in our MatchTrader platform:

• Margin requirements vary by asset class (e.g., forex, indices, commodities).
  
• Leverage levels are preset and visible in your instrument specifications.
  
• Breaching margin limits or showing reckless margin use may result in account violations.
  

You can check your margin stats — such as margin level, free margin, and used margin — directly in your MatchTrader terminal. This helps you learn real-world trading discipline while working toward payouts from your simulated capital performance.


By understanding how margin works and respecting it, you’ll not only avoid unnecessary violations at Pivex but also sharpen your trading discipline for long-term success.