How do I calculate my margin required for a trade?
To calculate the required margin for your trade, you need to determine a few things:
- The value of the trade
- Your account leverage
Here is an example:
- Let's say a trader has a USD account and you want to trade one mini lot (10K GBP/USD), that is worth the equivalent of 10,000 GBP.
- We need to convert this number of GBP to a value of the base currency of the trader's account, in this case USD.
Since FXCM has fixed margin requirements, we use $1.90 for our exchange rate on GBP/USD. So, these 10,000 GBP is worth -- 10,000 * $1.90 = $19,000.
Now that we know the value of the trade, $19,000, you can use a leverage profile to determine the amount of margin required to open a trade.
Let's say the leverage is 400:1, in this case $47.50 is required in margin ($19,000/400 = $47.50)