Used to account for deposits like various deposits with banks and other financial institutions

Author: Zezhao Fang
Zezhao Fang
Zezhao Fang
I hold a degree in Statistics from the University of Waterloo. As a graduate, my academic focus has equipped me with strong analytical and quantitative skills. While I currently do not have a specific profession or work experience, my education has honed my abilities in statistical analysis, data interpretation, and problem-solving. I am well-versed in various statistical methods and techniques, making me adept at deriving meaningful insights from data.
Reviewed By: Isabel Lin
Isabel Lin
Isabel Lin
Isabel Lin is a Computer Science and Economics student at Brandeis University, set to graduate in 2026. At Wall Street Oasis, Isabel progressed from a Financial Research Intern to an Editor Specialist, demonstrating her ability to analyze and communicate complex financial information effectively. In addition to her academic and professional endeavors, Isabel has achieved notable success in athletics and music, being a U.S. Junior Olympic National Gymnast and a Carnegie Hall Pianist. These accomplishments reflect her discipline and versatility, which she brings to her work in financial markets and computing.
Last Updated:August 31, 2023

What Is Margin?

Margin is used to account for deposits like various deposits with banks and other financial institutions. In the context of the lack of clear regulation of bonds in the law, it is necessary to explore the types of bonds, define them and determine their respective legal effects. 

The types include:

  • Security deposits of the reserved type
  • Security deposits of the pre-payment type
  • Lease security deposits
  • Decoration security deposits
  • Security deposits of the deposit type
  • Security deposits that retain the right to return
  • Security deposits that have no double return effect

Foreign exchange margin trading, also known as foreign exchange fringe trading, is by the bank or broker to provide credit where investors just hold 10% to lower funds which can be leveraged for foreign exchange trading. 

Its main feature is “small to large” and high risk and high return; therefore, a small amount of money can also carry out foreign exchange fringe trading.

Forex fringe trading offers the advantages of round-the-clock trading, high transparency, low transaction costs, and leveraged trading.

The role of the bid bond is to ensure that the bidder does not revoke its bid after the deadline for submission of bid documents and concludes a contract with the bidder following the bidding documents and its bid documents. 


  • After the deadline for submission of bids until the successful bidder is determined, the bidder shall not modify or revoke its bid document.
  • The bidder shall be guaranteed to sign a contract with the bidder following the bidding documents. 

After being determined as the successful bidder, its bid document shall not change its bid document's material content or abandon the successful bid. 

If the bidding document requires the successful bidder to submit a performance bond, the bidder shall also submit a Performance bond. If the bidder fails to fulfill the above obligations, the bidder may not refund the bid security submitted by the bidder. 

In addition, the bid bond is also effective in restraining the bidding behavior of the bidders and combating illegal acts such as bid-rigging, relying on and lending qualifications.

Key Takeaways

  • Margin is used to account for deposits in different financial instruments like bonds, foreign exchange trading, spot gold trading, and futures trading.
  • Foreign exchange margin trading offers high risk and high return with leverage, enabling trading with a small amount of money.
  • Bid bonds ensure bidders commit to their bids and follow bidding documents, preventing bid-rigging.
  • The advantages of investing in foreign exchange include 24-hour trading, high liquidity, and the ability to profit in any economic condition.
  • Unique advantages of forex margin trading over stocks include 24/5 availability, limited currency portfolio, minimal impact of individual investors, and the ability to profit in economic booms and recessions.

Spot Gold margin

Spot gold balance trading means trading gold contracts without making a full capital transfer but only paying a certain percentage of the total amount of that gold contract as proof of holding the order.

Spot gold margin trading is usually available in the following fringe types:

1. Account Opening Deposit

The opening fringe is the minimum deposit the dealer requires the customer to make when opening a foreign exchange fringe trading account. Minimum opening deposit: $100.

2. Trading 

Trading fringe is the balance that the dealer requires the client account to have when entering the market to buy or sell gold, i.e., when opening the trading session.

London Gold: $1000 per lot, London Silver: $650 per lot

3. Maintenance 

Maintenance fringe is the minimum amount of the client’s fringe that can maintain the trading account to continue to hold an open position during the position. 

The system forcibly closes the position when the fringe ratio of the client’s account is 30%. London Gold: $300 per lot, London Silver: $195 per lot

4. Lock-up 

A locked position means the client has traded with the same product and quantity but in the opposite direction. 

The lock fringe is the fringe charged for the portion of the locked position, and the lock fringe in the system is charged on a one-sided basis.

5. Available 

Available fringe is the net fringe value of the client’s account minus the used fringe balance.

6. Additional deposit

When the fringe ratio in the client’s account is less than or equal to 100%, a fringe call will be received.

In addition to the above, bonds can be divided into:

  • The deposit
  • Liquidated damages
  • Performance bonds
  • Project quality bonds
  • Other types

Advantages of Investment, buying and selling

The advantages of investing in foreign fringe: the object of investment is the national economy rather than the performance of listed companies. While the prices of common stocks move frequently, the prices of quality stocks always tend to rise.  

Speculation in foreign exchange is a bilateral transaction, you can buy up or sell down, and you can avoid the regulation of which; you can trade on the fringe, the investment cost is light; the volume is large, not easy to be manipulated by large investors; T+0 trading......

The eight advantages of investing in foreign exchange fringe:

  • The investment objective is the country’s economy, not the listed company's performance
  • Speculation in foreign exchange is bilateral trading; you can buy up or sell down and avoid the limits of which
  • Trading on the fringe is possible, and investment costs are light
  • The volume is high and not easily manipulated by large investors
  • T+0 trading (Same Day Swing Trading)
  • Managing the magnitude of losses (set a stop loss) without incurring greater losses due to a lack of buyers or sellers to take them on
  • Twenty-four-hour trading, buying, and selling can be done at any time
  • High-interest returns (stocks pay a maximum of four dividends per year, while Forex is a daily interest rate if the investor holds a high-interest currency contract)

Fringe also offers many advantages when trading on the fringe:

1. Worldwide Financial Markets

The international foreign exchange market cannot be manipulated by some individuals, banks, foreign exchange dealers, funds, foreign exchange suppliers, and demanders or countries. 

According to the statistics of the International Monetary Fund, the daily global turnover is close to 2 trillion dollars.

2. Global Trading

Daily international forex trading is conducted 24 hours a day, from east to west, without interruption. 

Regarding investment, forex trading operations can be carried out at almost anytime, according to new trends. It is possible to keep track of the rise and fall of the exchange rate, which is very convenient for the investment coat.

3. Mass market

Participants in foreign exchange trading include banks of all sizes, central banks, financial institutions, import and export traders, fund companies, and even individuals so that all people, rich or poor, can participate in trading.

4. High funding flexibility and high liquidity

Investors have a high degree of liquidity and flexibility as they can buy and sell in response to exchange rate fluctuations for up to 24 hours, with no time limits on entry or exit.

Additionally, they can remit funds into or out of the market as they move their funds.

5. Two-way buying and selling, flexible operation

Fringe can be bought first and then sold, or sold first and then bought. Buy and can be set up (stop-loss order - to control risk) and (profit order - to protect profit). 

In addition to the profit from exchange rate fluctuations, investors can also buy currencies with higher interest rates or sell currencies with lower interest rates to earn interest.

6. Low-cost volume and maximum profitability

The amount of foreign exchange fringe can be expanded up to tens of times larger, so the principle of financial leverage can be fully utilized to facilitate the flexible use of funds.

7. Easy to trade without the pain of hedging

Forex fringe trading is done by phone or online, so within nearly 24 hours. 

Investors can choose to withdraw as much or as little as they want without the risk of being unable to withdraw or being trapped, thus effectively controlling the risk of investors’ funds.

Unique Advantages of Forex Fringe

Forex fringe trading has many advantages that the stock market cannot match. The stock market can only be traded at certain times of the day, usually from 9:30 a.m. to 4:00 p.m. Especially if you have a job, you will face the dilemma of giving up your job or giving up trading. 

Forex fringe trading, on the other hand, is available 24 hours a day, five days a week, so you can devote your spare time to fringe trading in the evenings.

There are hundreds of stocks in the stock market, so picking stocks would be a difficult task. On the other hand, the currency market has a very limited portfolio of currencies, allowing you to focus on just a few and quickly catch the pulse of this performance.

The stock market has a much smaller trading volume than the money market, and tens of millions of non-professional investors influence the normal functioning of the market, making it more difficult to predict market movements. 

On the other hand, the money market is the world's largest financial market and includes many large participants - banks, investment funds, corporations, and other financial institutions. 

Therefore, no matter how many individual investors are involved in the currency market, the impact on prices is minimal.

Another disadvantage of the stock market is that in a bear market, investors cannot act and are forced to hold their positions. 

When the economy is booming, the vast majority of investors can profit, but economic development alternates, and when a recession replaces development, investors can only hold their positions. 

In the currency market, investors can profit regardless of whether the economy is developing or in recession, and this is the foreign exchange fringe shorting mechanism.

Futures Margin

The futures fringe (hereinafter referred to as balance) differs by its nature and role. It can be divided into two categories: settlement reserve and trading fringe. Settlement reserve is generally paid to the exchange by members according to a fixed standard. 

A settlement reserve is a pre-prepared fund for transaction settlement. Trading fringe refers to the actual fringe paid by members or customers to hold futures contracts in futures trading and can be divided into two categories: initial fringe and fringe call.

Initial fringe is the amount of money a trader needs to deposit when opening a new position. It is determined based on the trade amount and the fringe ratio, i.e., initial fringe = trade amount to fringe ratio. 

The minimum international fringe percentage is usually between 3% and 8% of the trade amount.

For example, if a commodity exchange has a commodity fringe rate of 5% and a customer buys five commodity futures contracts (10 tons each) at $2,700/ton, he must pay an initial fringe of $6,750 to the exchange (i.e., $2,700 x 50 x 5%).

During a trader’s position, floating profits and losses may occur due to changes in market conditions, so the actual funds available in the fringe account to cover losses and provide security may increase or decrease at any time. 

Floating profits will increase the fringe account balance, and floating losses will decrease the margin account balance. Maintenance Fringe is the minimum balance that must be maintained in the fringe account. 

Maintenance margin: the settlement price of an adjusted position multiplied by a fringe ratio of ‘k’ (k is a constant and represents the maintenance fringe ratio).

When the fringe book balance is lower than the maintenance fringe, the trader must replenish the fringe within the specified time to make the fringe account balance) settlement price position volume fringe ratio. 

Otherwise, the exchange or the institution has the right to implement the mandatory closing of positions on the next trading day. This part of the fringe that needs to be newly replenished is called additional fringe.

Magin FAQs

Researched and authored by Zezhao Fang | LinkedIn

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