In Forex trading, collateral refers to the assets that are pledged by a trader to cover any potential losses incurred in a trade. Collateral can be in the form of cash, securities or other assets, and is held by the broker or a third-party custodian. The amount of collateral required may vary depending on the trading strategy, the size of the position, and the broker’s margin requirements. If the value of the assets declines below a certain level, the broker may issue a margin call, requiring the trader to deposit additional collateral to cover the losses.