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Introduction to the calculation method of foreign exchange margin

2022-03-10

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　　Margin trading is the current international mainstream foreign exchange trading method.Through leverage,the actual transaction amount can be enlarged,and it has the characteristics of"small and big".The optional leverage ratio for foreign exchange speculation is usually as follows:50:1,100:1,200:1,250:1,300:1,400:1.

　　In most trading platforms,the required margin is all settled in US dollars.Taking the mini account as an example,one lot of 10K base currency transactions,if the leverage ratio is 200:1,requires 10,000/200=50 base currency units,and then multiplied by the current dollar price of the currency,namely The margin required to open a one-lot position.

　　The amount of margin will change accordingly with the changes in market prices(except for the currency combination in which the US dollar is in the lead).The margin required for trading on a mini account is shown in the table below(10K account):

　　By example:

　　First of all,the account setting conditions:the account of 10,000 US dollars,the leverage is 100:1,and the trading contract is based on the standard lot,that is,the contract of 100,000 US dollars.

　　The current currency pair includes the currency pair with the direct quotation method with the US dollar in the front,such as USD/JPY,USD/CHF,USD/CAD,etc.;one is the currency pair with the indirect quotation method with the US dollar behind,such as GBP/USD,EUR/USD,AUD/USD and the like;there is also a cross currency pair,such as GBP/JPY,EUR/JPY,AUD/JPY and EUR/GBP and so on.

　　Trading the above three types of currency pairs,the calculation method of the margin used is different,now to explain in detail:

　　The first one,the margin used for the currency pair with the direct price in front of the US dollar=the number of contracts x the number of trading lots Example:The current price of USD/JPY is 88.65/88.68,to buy a standard lot,the margin used is=100000x1/100=If the$1,000 is in your hand,and his contract is 10,000,the margin used is$100,calculated according to the above method.

　　Second,the margin used for the indirect price currency pair after the US dollar=the number of contracts x the number of traded lots x the entry price of the currency pair.

　　For example:the current price of GBP/USD is 1.6284/87,to buy a standard lot,the margin used=100000x1x1.6287/100=1628.4 US dollars That's equivalent to$162.84.

　　The third,the margin used for the cross currency pair=the number of contracts x the number of trading lots x the exchange rate distance between the currency and the US dollar before the"/":GBP/JPY makes one standard lot.Then his margin=100000x1x1.6287(the exchange rate of GBP/USD)/100=GBP of 1628.7 USD is in front,so the calculation of his margin should be multiplied by the exchange rate of GBP/USD.Other classes such as EUR/JPY and AUD/JPY,etc.,have similar methods.

The above information is provided by special analysts and is for reference only. CM Trade does not guarantee the accuracy, timeliness and completeness of the information content, so you should not place too much reliance on the information provided. CM Trade is not a company that provides financial advice, and only provides services of the nature of execution of orders. Readers are advised to seek relevant investment advice on their own. Please see our full disclaimer.

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Introduction to the calculation method of foreign exchange margin

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