How can I calculate the margin?

Margin is the amount of money that a trader needs to put forward in order to open a trade. It is a part of your equity, deferred as collateral, in order to open a position and maintain it. 

This ratio is calculated using the following formula: 
 

Margin = Volume * Contract size / Leverage 

You may also find the minimum margin in the Contract Specifications section of the instrument. 

Let's familiarize ourselves with some common terms that would be encountered while calculating margin requirements. 

Volume: 

The volume is taken in lots where: 

1.00 refers to 1 standard lot or 100,000 units of the base currency. 

0.10 refers to 10,000 units of the base currency. 

0.01 refers to 1,000 units of the base currency. 

Contract size — Equivalent to the traded amount on the Forex or CFD market, which is calculated as a standard lot size multiplied by the lot amount. The Forex standard lot size represents 100,000 units of the base currency. For CFDs and other instruments see details in the Contract Specifications page. 

Leverage — The ratio of the position`s notional value to the amount of margin required for opening a position (e.g., leverage 1:20 means that a EUR 100,000 contract requires as low as 5,000 EUR margin). 

However, when the client wants to open multiple trading instruments then margin requirement calculation can be done as follows: 

In order to calculate the Margin Requirement, we need to first identify the type of trading account – Retail or Professional. 

Retail Client 

If the trading account has a retail status, we need to refer to the margin requirement for retail clients here on our Margin requirements page. The leverage is fixed for retail clients and does not vary with notional value. 

The ratio of margin requirement is calculated using the following formula: 

Margin requirement = Total Notional Value / Leverage 

If the account currency differs from the currency of the instrument, then we need to convert the currency. If the margin currency is in the first place in the currency pair and the account currency is on the second, then we need to multiply the margin by the exchange rate. If the margin currency is in second place in the currency pair, then we need to divide the margin by the exchange rate. For example, if we have established that the margin is 100 EUR and the account currency is USD, we multiply 100 EUR by 1.05484. On the contrary, if the margin is 100 USD, then we would calculate as 100 USD / 1.05484 
 
*Please note that the currency rate is used as an example only, you should check the currency rate in your Meta Trader platform  

Total notional value: Volume * Contract Size 

For example, if a position is opened as: Buy 1 lot EURUSD at 1.05484. 

The notional position value in the account`s currency (USD) is 1 lot * 100,000 * 1.05484 = 105,484 USD. 

Here 1 lot is the volume, 100,000 is the contract size and 1.05484 is the conversion price at the moment the order was opened (the base currency is EUR, so the base currency has been converted to the account currency). The open price is taken from the trading platform at the moment the trade is opened. 

The fixed leverage of 1:30 is applied to this position and the margin requirements are calculated as: Notional value / Leverage = 105,484 / 30 = 3,516.13 USD. 
 

Another example: Sell 2 lots GOLD at 2645.30 while the GBPUSD rate in MetaTrader is 1.26630. 

GOLD is quoted in USD, so the notional position value in the account`s currency (GBP) is 2 lots * 100 oz * 2645.30 / 1.26630 = 417,799.89 GBP 

Therefore, a leverage of 1:20 is applied to this position and the margin requirements are calculated as 417,799.89 / 20 = 20,889.99 GBP. 

If you want to look into more examples, please kindly visit this page Margin Calculations on our website. 

If you have any questions, please do not hesitate to contact us.