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