Views:

Margin (amount of funds required to open a position) for FX pairs is normally nominated in Base currency (first currency in the pair) and calculated according to the following formula: 

 

Forex: 

 

Margin = Lots x ContractSize / Leverage 
 


CFD: 
 

Margin = Lots x ContractSize * OpenPrice / Leverage 

 

where: 

Lots – number of traded lots 

ContractSize - the size of the contract in the Base currency (normally 1st currency in FX pair). Standard contract size in FX is 100,000. 

Leverage – leverage provided for this specific account (ex: 1: 100 – 100, 1:200 – 200, etc). Leverage in most cases is not used for CFD. 

OpenPrice – the trade open market price. 

 

After margin is calculated in the Base currency it will be converted to account (deposit) currency using current market rates. 

 

Example 1: Let’s get the margin for 0.1 lot of EURUSD.  

 

  • Trading volume in lots: 0.1 

  • Trading instrument: EURUSD 

  • ContractSize(EUR): 100,000 

  • Leverage: 500 

 

Margin(EUR) =  0.1 x 100,000 / 500 = 20 

Margin(USD) =  20 x 1.00280 = 20.06, where 1.00280 is a current market rate of EURUSD 

 

Now, in case it is Yen account the trading server automatically converts the calculated margin value to JPY:

 

Margin(JPY) = 20 x 137.440 = 2,748.8, where 137.440 is a current market rate of EURJPY 

 

Example 2: Let’s get the margin for 1.0 lot of XAUUSD 

 

  • Trading volume in lots: 1.0 

  • Trading instrument: XAUUSD 

  • ContractSize(XAU): 100 (XAU – gold ounces) 

  • Open price: 1738.54 

  • Leverage: 100 

 

Gold margin currency is USD. You can view the margin currency clicking on the symbol specification in the Market Watch window of the client terminal: 

 

As per our formula:

Margin(USD) = 1.0 x 100 x 1738.54 / 100 = 173,854 / 100 = 1738.54