We usually pay some money just to buy something. In the same way, the forex market is defined to make a process to settle two days in arrear to the trade date. This is so called OTC spot trading. On the other hand, we don't have to pay full amount in the forex margin trading and we are required to pay or receive the translation gains or losses when the position are made square. Here, a problem may happen. If the losses by a certain investor expand further and he got fallen default to pay any more, what is happening? Such trading system would be forced to fail to keep working.
The margin requirement is defined as the deposit necessary for some collateral in order to solve such kind of problem. The forex margin trading turns out to be very efficient in the fund usage, and the forex margin trading requires one of tenth or one of twentieth as much money as the actual face value you would try to trade, although you might feel strange.
The name of margin which means "proof" in Japanese, should come from where investors must show money as proof to keep trading in former days. There are various types of the margin, the initial margin, the margin requirement and the maintenance margin. The beginner might feel unfamiliar to those terminologies.
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