What is margin?

If you read the previous examples on calculating pip value, you might have wondered "When will I be able to buy 230,450 EUR/USD? It's a lot of money I do not have." Fortunately, most brokers offer 1% margin accounts. This means that you do not need 230,450 euros or the equivalent, but only 1% of that amount, or 2,345 euro for this specific transaction. Of course, if the total balance of your account is 4,000 euro, it's not a good idea at all to take a trade for 2,345 euro. 2,345 euros is a whopping 59% of your balance.

There are brokers who offer 0.5% margin, and even 0.25% margin. Choose the one you think is right for you.

Remember to trade with as small fraction of your account as possible in order to enjoy a longer stay in the forex arena.