<p>Discount Margin (DM) is a key risk management concept in trading, representing the difference between the purchase price of an asset and its expected selling price. It's a safety net that traders build into their positions to protect against potential losses.</p>

<h2>How It Works</h2>
<p>The Discount Margin is calculated as the percentage difference between the expected selling price and the purchase price of an asset. It's typically expressed as a decimal or percentage. Here's the formula:</p>
<table>
<tbody>
<tr>
<td><strong>DM</strong></td>
<td>=</td>
<td>(Expected Selling Price - Purchase Price) / Purchase Price</td>
</tr>
</tbody>
</table>
<p>For example, if you buy an asset for $100 and expect to sell it for $115, your DM would be:</p>
<table>
<tbody>
<tr>
<td>DM</td>
<td>=</td>
<td>(115 - 100) / 100 = 0.15 or 15%</td>
</tr>
</tbody>
</table>

<h2>Why It Matters for Traders</h2>
<p>Discount Margin is crucial for traders for several reasons:</p>
<ul>
<li>It helps set realistic profit targets. A DM of 15% means you're aiming for a 15% profit on your trade.</li>
<li>It helps manage risk. A higher DM means you're more protected against losses, as you need less price movement to break even.</li>
<li>It's a key input for stop-loss placement. Traders often set their stop-loss at the level where their DM is eroded, i.e., their trade becomes unprofitable.</li>
</ul>
<p>On STB's MetaTrader 5 platform, you can easily calculate your DM using the built-in calculator or by setting your stop-loss and take-profit levels.</p>

<h2>Example</h2>
<p>Let's say you're trading EUR/USD with STB, and you've bought the pair at 1.1850. You expect it to rise to 1.1950. Your DM would be:</p>
<table>
<tbody>
<tr>
<td>DM</td>
<td>=</td>
<td>(1.1950 - 1.1850) / 1.1850 = 0.00847 or 0.847%</td>
</tr>
</tbody>
</table>
<p>If you set your stop-loss at 1.1820, you're effectively building in a DM of 0.263% (or 0.263 pips).</p>

<h2>Key Takeaways</h2>
<ul>
<li>The Discount Margin is a trader's safety net, protecting against losses.</li>
<li>It's calculated as the percentage difference between the expected selling price and the purchase price.</li>
<li>It helps set realistic profit targets and manage risk.</li>
<li>It's a key input for stop-loss placement.</li>
</ul>