Margin is the deposit you need to put up to cover a position. This is because you are trading with leverage, and therefore need to be able to withstand a certain amount of movement in the markets. The margin deposit is typically a fixed amount, such as 5% of the total value of the trade. It assures the broker that you can cover losses upfront. If you have losses over the allotted amount of deposit necessary to open a position, the broker then will use other cash in your account to add to the necessary margin to keep the trade open. If your losses exceed the available margin in your account, the broker will typically close the position for you in what is known as a “margin call.”