Banks and/or online trading providers need collateral to ensure that
the investor can pay in case of a loss. The collateral is called the
margin and is also known as minimum security in Forex markets. In
practice, it is a deposit to the trader's account that is intended to
cover any currency trading losses in the future.
Margin enables private investors to trade in markets that have high
minimum units of trading by allowing traders to hold a much larger
position than their account value. Margin trading also enhances the
rate of profit, but can also enhance the rate of loss if the investor
makes the wrong decision.