How to Calculate Margin?

Margin in the Forex market is as important as other frequently used terms. If we want to win in this market, we need to know what the basic financial terms are at a certain level and how they are calculated. If we do not have sufficient knowledge level, then the transactions we do are damaging,

We will examine in detail how to calculate margin and what the margin is.

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Margin is the minimum amount of collateral that must be kept in order to open a transaction.

In Forex, whether you are buying or selling transaction in metatrader platform or another, you must have a certain amount of money in your account for each transaction you make. The amount of this collateral varies with the effect of the leverage. Every institution can offer different leverage ratios. You should be able to confirm the leverage ratio you have worked with your company.

How to leverage in Forex is very difficult to be successful on the forex market without having detailed knowledge about forex leverage calculations. For this reason, we will examine in more detail what margin is, how margin is calculated, leverage ratio.

Margin properties;

•  The collateral level calculated for each product is different.
•  This amount can not be withdrawn during the period when the transaction is open, since the margin amount that must be accounted for in a transaction is kept in the bloke.
•  Margin calculation requires knowing the leverage ratio of the products.
•  When the margin level is calculated, the amount of lot processed is taken into account.

 In the same transaction, margin is not taken because the same amount of Buying and Selling operations are equal to each other.

Let's explain what's in the sample to better understand what the margin is.

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For example,

You want to open a 1 lot BUY transaction in EURUSD.

The 1 lot EURUSD transaction actually means an opening of 100,000 euros. (EURUSD contract size = 100,000 units)

If your account has a leverage ratio of 1: 100; The amount of collateral you need to take means 1 in 100 of the transaction volume you make.

100,000 / 100 = 1000 euro margin is required.

So you need to have in your account in order to open 1 lot transaction in eurousd parity is 1000 euro.

If you have deposited 500 USD for Forex trading, you will not be able to open 1 lot EurUsd transaction.

So; If your account has 500 USD and your leverage ratio is 100;

You can open 500x100 = 50,000 USD transactions. This means about 0.50 lots of transaction as lots.

If you open both selling and buying transactions on the same amount ans the same product, no margin will be taken from your account.

MARGIN CALCULATION FORMULA

Margin = Lot x Contract size x Price

                   Leverage ratio

• Lot: Opened transaction size
• Contract size: contract size for 1 lot process
• Price: The transaction price you want to make
• Leverage ratio: Product leverage ratio

Let's calculate the margins for the Eurusd price 1.06 for the 0.10 lot process (if the leverage ratio is 100)

Margin= 0,10 x 100,000 x 1,06 = 106 usd

                            100

According to the formula, the margin is in the form of quote currency.

On the trading platforms, this margin account is made automatically by the system. Therefore, many people do not know about this margin account. However, it is important to know how margin is calculated, how much margin is required to open a new transaction, how much margin can be closed without difficulty, Information.

If you have a problem with the subject or if you want the margin to be calculated, you can write us in the comments field.

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