What is margin?

What it means

Margin is not a cost and it is not a loss — it is money reserved, not spent. Required margin is the notional value of the position divided by leverage, so a standard lot of gold at $4,000 with 1:500 leverage requires roughly $800.

Why it matters

The number that actually governs whether you can keep trading is free margin: equity minus used margin. Free margin falls both when you open positions and when open positions move against you, which is why a series of losing trades can leave you unable to open the next one even though the balance looks adequate.

What this changes in practice

For an automated system this creates a specific failure worth planning for. If the account is close to fully margined, order rejections start appearing with a "not enough money" result and the bot appears to have stopped working for no reason. The fix is capital or smaller size, not a setting — see not enough money and the margin calculator.