What Is The Margin In Currency Trading?

Unlike in stock markets, the margin deposit isn’t a down payment on the purchase of equity. Instead, it is a good faith deposit. This margin allows the traders to hold a position much larger than their account value. If the funds in the account happen to fall below the margin requirements, then your broker may close some or all of your open positions. This will prevent your account from falling into a negative balance, even in a fast moving market.

Why do Forex Brokers Pay or Take Overnight Interest?

With most Forex brokers when you leave a currency pair position open over the night you’ll get a swap or an interest payment for it. It can be positive (you actually gain money) or negative (you lose money). That payment is usually very small and the majority of the beginning traders just don’t pay any attention to it, since their direct profit or loss from the trading is much greater than this rollover interest. But why do the brokers pay and take this overnight interest payment or swap?

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