Here is the basic formula used to calculate margin: Margin=Trade Volume/Account Leverage. Please note that Trade Volume is calculated depending on the currency of your account. While calculating a trade volume, you need to take the Base currency into account. The Base Currency is the first in a currency pair.
EXAMPLE 1. Let’s assume that you have a trading account in USD with a leverage of 1:50, and you are going to open a 0.2 lot trade on USDCHF currency pair. The required margin will be: Margin = Trade Volume/Account leverage=20 000 (0.2 lot)/50(our leverage)=400USD.
EXAMPLE 2. Now let’s assume that you have a trading account in USD with a leverage of 1:200 and you are going to buy 0.5 lot of the EURUSD currency pair. Given that the current EURUSD exchange rate is 1.3200, the required margin will be: Margin=Trading Volume/Account Leverage=50 000*1.32/200=330USD. In this example we have bought 0.5 lots of EUR, but our account is in USD, that is why we have converted the amount of our trade back to USD – according to the current exchange rate.
Risk warning: Forex, spread bets and CFDs are leveraged products. They may not be suitable for you as they carry a high degree of risk to your capital and you can lose more than your initial investment. You should ensure you understand all of the risks.
FXChoice Limited is authorised and regulated by the IFSC (Licence number: IFSC/60/191/TS/19)
FXChoice Limited registration number: 105,968
© 2020 FXChoice Limited. All rights reserved
Powered by LiveHelpNow Help Desk Software