Bank and/or online trading providers need collateral to ensure that the investor can pay in the event 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 acount that is intended to cover any currency trading losses in the future.

Margin enables private inverstors 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 similarly enhances the rate of loss, beyond that taken without leveraging.