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Trading CFDs involves significant risk of loss

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