 ## FOREX CALCULATION

Required Margin

Since you are trading with Forex4group you can calculate exactly how much margin is required to have in your trading account in order to open a new position either in Forex or CFD’s. By doing this you can determine whether you have sufficient equity in your account to open a position at a specific lot size or whether you should reduce the lot size that you are trading or even alter the leverage that you are using.

Formulas:

Required Margin = Trading Amount * account currency exchange rate / Leverage (if this is different from the base currency of the pair traded)

Example: Trading 2 lots of EUR/USD using 1:200 leverage with a USD account currency:

• Trading amount:                                          200,000
• Account currency exchange rate:             1.09085
• Required margin:             200,000 * 1.09085 / 200 = \$ 1090.85

For metals the required margin calculation is as follows:

Example: Trading 200 oz of gold using 1:200 leverage with a USD account currency

• Trading amount:                                          200 oz
• Account currency exchange rate:             1053.80
• Required margin:             200 * 1053.80 / 200 = \$ 1053.80

Pip value:

Is the value that each pip has at a specific instrument and trading amount. Is calculated as follows:

• Trading amount:              200,000
• Pip decimal place:            4
• Pip value:                         200,000 * 0.0001 = \$ 20

*A conversion into USD is required when the secondary currency of the pair is different than USD.

Balance:

Your equity excluding any open positions.

Equity:

Your available equity including any open positions that you might have.

Margin:

A sum of required margins of all open positions.

Free:

Equity available for trading taking into account any opened positions

Free equity = Equity – Margin