Important: To simplify the calculation of margin requirements we recommend using the trader’s calculator.
The formula for calculating margin in the base currency:
Margin = Contract size / Leverage
The base currency is a currency, standing first in the quote, for example:
in EURUSD the base currency is EUR;
in USDCHF the base currency is USD;
in GBPUSD the base currency is GBP;
The size of a contract is the amount of a contract in the base currency. The value of 1 lot is always 100,000 units of base currency. Accordingly, the value of 0.1 lot = 100,000 * 0.1 = 10,000 units of base currency, the value of 0.01 lots = 100,000 * 0.01 = 1,000 units of base currency;
Leverage is a ratio between the trader’s own funds and borrowed funds, for example:
1:200 leverage -- 200;
1:100 leverage -- 100.
After calculating the margin in the base currency, convert it into the deposit currency (according to the exchange rate at the time of opening positions) -- US dollar, Euros.
Consider this example:
A trader uses 1:200 leverage to open a long position of 1 lot EURUSD at 1.2457. The margin for this position is calculated as follows:
For this long position the base currency is EUR. Thus, the margin for this position will be 100,000 / 200 = 500 EUR;
If the currency of trading account is USD, not EUR, the margin calculated in EUR should be converted into the currency of trading account;
200 EUR * 1.2457 USD (if the currency of the trading account is the US dollar).