All spreads and margins are set forth by your broker. All the profits and losses obtained are affected by your broker’s spreads, margins and commissions. Minimum required margin is 1:500.
What Are Spreads & Margins?
Spreads: refer to the difference between the bid (buy) and ask (sell) price of an asset. A lower spread means lower trading costs.
Margins: represent the amount of capital required to open a leveraged trading position. Nikmill offers a minimum required margin of 1:500, allowing traders to control larger positions with less capital.
How Spreads Impact Trading
Spreads directly affect your profitability:
Tighter Spreads → Lower costs, making it easier to turn a profit.
Wider Spreads → Higher costs, meaning price movements must be larger for profitable trades.
Factors that affect spreads include:
- Market volatility
- Liquidity of the asset
- Time of day (e.g., spreads may widen during low-volume hours)
What is Margin Trading?
Margin trading allows traders to borrow funds from a broker to control larger positions with less capital. While this can amplify gains, it also increases risk.
Example: With a 1:500 leverage, a trader with $1,000 can control a $500,000 position in the market.
Key Risks of Margin Trading
- Increased losses – If the market moves against you, losses can be magnified.
- Margin calls – If your account balance drops below the required margin, you may need to deposit more funds or close positions.
Why Spreads & Margins Matter
- Lower spreads = Reduced costs, better profitability.
- Higher leverage = More market exposure, but also higher risk.
- Understanding margin requirements = Preventing margin calls and potential liquidation.
Trade Smart! Always manage your risk by using stop-loss orders and maintaining a healthy account balance.
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