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Types Of Collateral In The Forex Market
Forex is a 5/24 active market where you can easily invest from the internet around the world. This market, which responds to short, medium and long-term investments, is most often raised with leverage. Leverage allows you to invest as much as a certain amount of your collateral. This rate varies from country to country. In Turkey, this ratio is determined by The Capital Markets Board as 1 to 10. In Forex, where you will invest up to 10 times your capital, you must have a guarantee for this. The guarantees that you show to both open transactions and take advantage of the leverage ratio are one of the most important investment steps. Forex collateral types differ depending on their function. Let's take a brief look at how your capital, which you show as collateral, takes shape in your forex transactions.

Minimum Collateral

This type of collateral is also called “required collateral”. It represents your collateral in the amount required to invest. This amount of collateral varies depending on the traded product, the traded market, and the leverage ratio. Initial guarantees set by brokerage firms are usually recommended for beginners or low-capital investors. In this way, the investor does not have to risk very large investment amounts and wait in case his position falls backwards. As a rule, the collateral ratio required for a 1-to-10 leverage ratio is 1%. High investment capital can be achieved with the help of leverage, even with low collateral.

Free Collateral

The amount of money you can use in your account after opening a position is called free collateral. In other words, free collateral is the amount left in your account after opening a position and depositing the necessary collateral. This amount is determined by adding profit or loss after subtracting the total amount of collateral you have paid from your balance and may vary instantly over parity. It is understandable how many more positions can be opened with the amount in the capital. Open positions or positions are closed when the available collateral value drops to zero. This situation is called “Margin Call” (Margin Call).

Collateral Used

It is the type of collateral blocked by the broker setup to keep Forex transactions open. This money belongs to the investor again, but the investor cannot use this money. So we can actually compare this app to the deposit system. The money in the account is not active during the transaction. In order to use the found money, only existing transactions must be closed and a new transaction must be started.

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