A margin or initial margin, denotes the percentage of the purchase price of an asset (purchased on margin) that an account holder must pay for with available funds in the trading account.
For example, assume a trader wants to purchase 10 Bitcoins at a price of $4,000 Bitcoin. The total cost of this transaction amounts to $40,000. However, if the trader opens a margin account and deposits 50% initial margin required -- or $20,000 -- the total trading power will rise to $40,000 (whereby the trading account is given a 2x leverage).
Margins allow people to trade higher value assets by using (or collateralizing) a lower amount. Through margin trading and leverage, traders are able to realize higher profits (or losses) without actually having to own the asset.
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