What is margin?

    Articles in this section

    Margin is the total amount of money required in order to open a position. Margin is calculated based on the current price of the base currency against the USD, the size (volume) of the position and the leverage applied to your trading account. The free margin is the amount of funds that is available to open new positions.

    The Margin calculation is as follows:

    Margin required = (current market price x Volume) / Account leverage

    In practice this would be calculated as follows:

    If open a position of 0.1 lot (10,000) in EUR/USD at the current market price of 1.09358 and your account has a leverage of 1:500 you would calculate the margin required as follows:

    (1.09358 x 10,000) / 500 = $21.87

    In this example the margin on this position would be $21.87, therefore in order to open a position of this size you would require at least $21.87 in free margin in your trading account.

    share it :

    Learning to Trade?

    View our collection of free education resources dedicated to help you become a more informed and confident trader.