Most trading terminals use the basic parameters for displaying margin values:
- The value of the Balance field. This field shows how much money is in your brokerage account, taking into account only all completed or closed transactions. Current open transactions in the “balance” field are not taken into account.
- The value of the Equity or Means field. This field shows how much money is actually in your brokerage account, that is, taking into account all open and closed transactions. In other words: Means = Balance-Current profit/loss.
- Margin field value. This field shows how much of your funds are pledged or secured for open transactions.
- The value of the Free Margin field. This field shows how much of your funds are left unused and is available for opening new transactions or debiting from a trading account.
- The value of the Margin Level field. This field shows the percentage of your funds to the level of deposit loading (to margin).
How to calculate forex margin
There are currently 2 main ways to calculate margin: simple and very simple:
Suitable for those who have a friendly relationship with math. To calculate, we need to know the quote for the currency pair by which we want to open a transaction, the desired lot and the leverage of your trading account.
Margin = (Quotation * Lot) / account leverage.
Substitute our values in this formula and get:
Margin = (1.25373 * 10 000) / 400 = 31.34 USD
Thus, we get the amount of required collateral for a transaction with our parameters.
Very simple method
Suitable for everyone, and especially for those who do not want to count manually. For this method, we need a forex margin calculator. This is the usual trader’s calculator, which is available on the site of any self-respecting broker. We enter the parameters of our transaction in the calculator: first, select the account leverage, currency pair, transaction volume, transaction type, opening price. The calculator instantly calculates to us all the parameters of a possible transaction, among which there will be a margin value.