What is a Variation Margin?
Definition of Variation Margin: It has two meaning in the Forex trading. It is commonly referred as a whole amount that the broker may request to you, provided that you use the leverage or margin for returning the account to the initial margin needs. The expression can also be utilized for describing the unrealized profit or loss for Future or Option contract. On the other hand, as far as leverage context is concerned, the broker will need you to place a maintenance and initial amount. Maintenance is referred as the smallest margin or the leverage ration that sets a level accounting balance which must satisfy the leverage or margin that is currently used. It is the defensive measure to lessen the risk of forex trader and broker. If the balance of the account falls under this level, the broker will attain a margin call demanding huge funds on the deposit. Generally, it is lesser than the initial deposit need. The positions that are especially determined dangerous, the exchange, regulators and the broker can set the requirement of the maintenance than the normal requirement.