Margin (finance)

The term Margin (, deposit sum 'or' security ' ) refers to economics, particularly in the corporate finance and in the context of trading, the safety position for futures trading by the deposit of a certain deposit.

Background

Exchange forward contracts are characterized by the fact that not the full amount of value of the underlying market object is to deposit as security. For convenience of calculation of a margin there are two pioneering systems. First, the premium margin system and the other is the risk-based margin system. The latter comes in the EUREX - one of the largest derivatives exchanges in the world - to use.

The margin is to be filed with the closing expenses until the next trading day, ie overnight, secure.

A distinction between premium margin and additional margin for options. For futures, a distinction between initial margin (sometimes called Additional Future Margin ) to be furnished in advance guarantee to cover risks of loss, and the variation margin, which covers the daily profit and loss compensation.

Margin Call

A margin call is the credit-financed trade nachzuschießen (eg, foreign exchange, futures or CFD trading ) asking the broker additional capital as collateral. It is usually the result of a negative for the dealer course development, which has already exceeded the deposited security or is on the verge.