Calculate Your Margin for Forex Trades

Everyone wants for good returns if they are invested in any business. But at Forex Trading if we think about margin means profits. If you think a genuine way Margin means good faith deposit to open a position, right?

So, basically margin is usually presented as a percentage amount of the full position as you invested say 0.25%, 0.5%, 1%, 2%, in this way. You may be calculating the maximum leverage you can use with your trading account based on the margin required by your broker.

AVFX is the best Online Forex Trading Broker. We Provide safe and secured trading to our valued customers providing by our dedicated services at your doorstep!

Why Calculation of Margins Required

Margin calculation in Forex Trading is a deposit and a trader puts up in order to secure a position. The margin depends on your investing amount in trading. Ensuring that don’t expect for too much on margin, otherwise you'll lose everything if your trades prove to be failed. So trading on margins is a big thing for a trader.

The formula for calculating the margin for Forex Trading is very simple. 

Multiply the size of the trade by the margin percentage (%). Subtract the margin used for all trades from the remaining Equity in your Trading Account. The result of the amount value is margin that you have left.

How Margin Calculation Works

Suppose, you might be staking a position for a currency pair with neither the base and nor the quote currency that is same as the currency used on your account. As a result, the margin requirement for these kinds of trades can be calculated with a currency which is totally different from what your own account you deals with and make calculating margins also a bit difficult.

Let's say that you decided to trade with EURO and JPY. The currency you use in your account in USD. Lets you decide to take a position with 5,000 units of currency. This means that you are buying 5,000 EURO against an equivalent number of JPY, right?

Then you are paying in JPY and buying in EURO. But in real way, you are buying JPY with USD. As far as your forex broker is concerned about it, your margin requirement will be calculated solely by USD.

Here’s the formula to calculate Margin Calculation below with example of trading EURO/JPY as follows:

1. Account Currency = USD
2. Base Currency = EURO
3. Quote Currency = JPY
4. Base Currency/Account Currency = Current Exchange Rate of GBP/USD
5. Units = 5000

Formula:

Margin Requirement = ([BASE Currency / Account Currency] x Units) / Leverage

For EURO/USD:

Base Currency/ Account Currency = Exchange Rate between the 2 Traded Currencies.

However, when it comes to Forex Trading, margin is something that you’ll need to address as soon as possible rather than delay. So, you can easily calculate your Margin with above formula.

Keep Happy Trading and open your trading account with AVFX Capital today.

Disclaimer:

This information provided for general information and educational purposes only and not intended and not be construed to constitute any advice. Ensure that if such information is acted upon by you then this should be not involving anyone at your freedom to decide and AVFX Capital will not be held accountable in any way.