How to calculate margin requirements? | Forex Factory

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How to calculate margin requirements?

  • #1
  • First Post: Nov 2, 2019 10:08am Nov 2, 2019 10:08am
Hi.

I would like to ask some mathematician wiz to help me understand leverage and margin. I would like to play with 10 lots with a leverage of 500:1. What is the minimum capital to have if I want to have at least 200% worth of margin?

Thanks
You're going to pay a price for every bloody thing you do and don't do
  • #2
  • Nov 2, 2019 8:26pm Nov 2, 2019 8:26pm
you just need a margin calculator, pepperstone have one on their site
life is a reflection of what we allow ourselves to see
  • #3
  • Nov 2, 2019 10:02pm Nov 2, 2019 10:02pm
Quoting newbietofx
Hi. I would like to ask some mathematician wiz to help me understand leverage and margin. I would like to play with 10 lots with a leverage of 500:1. What is the minimum capital to have if I want to have at least 200% worth of margin? Thanks
depends on what currency pair you are trading and what currency your account is in.
4000usd potentially
  • #4
  • Nov 3, 2019 2:19am Nov 3, 2019 2:19am
Quoting newbietofx
Hi. I would like to ask some mathematician wiz to help me understand leverage and margin. I would like to play with 10 lots with a leverage of 500:1. What is the minimum capital to have if I want to have at least 200% worth of margin? Thanks
first of all forget any broker margin calculaters
second know the Margin general rule:
you can find it here:
https://www.forexfactory.com/showthread.php?t=952861
and solved examples: posts#225, 226
https://www.forexfactory.com/showthr...7#post12570297
https://www.forexfactory.com/showthr...1#post12570301
each day 10%,,,, https://www.forexfactory.com/thread/1371538
  • #5
  • Edited 3:03am Nov 3, 2019 2:29am | Edited 3:03am
now we know the rule:
Margin = Contract Size/Leverage*ZZZBBB*BBBDDD*Lots
you can solve any complicated case, whatever your leverage, whatever instrument, whatever your broker name or its stop-out level, etc . . .

Quote
I would like to ask some mathematician wiz to help me understand leverage and margin. I would like to play with 10 lots with a leverage of 500:1. What is the minimum capital to have if I want to have at least 200% worth of margin?

if you mean by 200%, margin level, (see picture)
Margin Level % equation is: Equity/Margin*100%
then in your case at start, Equity/Margin*100% = 200% -----> equity = 2*Margin -----> margin = 0.50*equity

you want to enter 10 lot on BBBQQQ instrument (it may be EURUSD, or gold, or dowJonz or Microsoft share, or GBPNZD, )

say it is AUDCAD: ----> BBBQQQ=AUDCAD ------> BBB=AUD ------- QQQ=CAD ----- assuming your account denominating currency is DDD=USD:

Then: BBBQQQ = AUDCAD ----- BBBDDD=AUDUSD ------ QQQDDD = CADUSD = 1/USDCAD
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each day 10%,,,, https://www.forexfactory.com/thread/1371538
  • #6
  • Nov 3, 2019 2:35am Nov 3, 2019 2:35am
what is any instrument cz? you have to know any instrument specifications - like CZ: cONTRACT sIZE
anyway it is very famous for currencies, it s 100,000 BBB (in base currency)---for AUDCAD = 100,000 AUD -------- since BBB=AUD for this pair>
Attached Image
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  • #7
  • Nov 3, 2019 2:39am Nov 3, 2019 2:39am
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  • #8
  • Nov 3, 2019 2:46am Nov 3, 2019 2:46am
you said 10 Lots ----> Lots=10
You said Leverage is 500:1
then Leverage = 500

back to general rule:
Margin = Contract Size/Leverage*ZZZBBB*BBBDDD*Lots
for currencies ZZZBBB=1(since ZZZ=BBB=AUD--nor need to currency conversion)

Margin = 100,000/500*1*AUDUSD*10

for AUDCAD, you need to know AUDUSD price. it is now 0.6912

Margin = 100,000/500*1*0.6912*10 = 1382.4 USD

therefore ur balance to get 200% should be double of the margin = 1382*2=2765 USD

Margin Level itself is a risk measure, in my opinion is "fake"
you had better understand MCP-Theory insead.
each day 10%,,,, https://www.forexfactory.com/thread/1371538
  • #9
  • Nov 3, 2019 2:55am Nov 3, 2019 2:55am
upon my theory MCP for your case assumed on AUDCAD:
and assuming your broker Stop-Out-Level SOL(lowest Margin level value) is 50% then: SOL=0.50 as a value not %

MCP = (Initial Equity - SOL*Margin)/(Lots*QQQDDD) = (Initial Equity - SOL*Margin)/(Lots*CADUSD) = (Initial Equity - SOL*Margin)/(Lots/USDCAD)

price of USDCAD now is 1.3139

MCP = (2765 - 0.50*1382)/(10/1.3139) = 272.5 pippete = 27.2 pips

you will recive a margin call after movement against you by 27 pips only!!!!!!!!!!!! is it acceptable!!

so please think using MCP language rather than stupid margin level languge.
each day 10%,,,, https://www.forexfactory.com/thread/1371538
  • #10
  • Nov 3, 2019 2:59am Nov 3, 2019 2:59am
assume ur position hit margin level of 50% (=your position is closed automatedly by broker due to margin call alarm) -- what will remain of your money??

Ans:
Remaining money = SOL*Margin = 0.50*1382 = 691.2 USD!!

that mean your equity dropped from 2764 to 691??
Losses = 2764-691 = 2074 USD

===> in % ----> Losses = -75%
each day 10%,,,, https://www.forexfactory.com/thread/1371538
  • #11
  • Nov 11, 2019 8:54pm Nov 11, 2019 8:54pm
A good trader should trade based on risk. And have take profits and stop losses at logical points. I.e strategy determines the entry and the exit and risk determines the subsequent lot size.

I have a spreadsheet sheet where you input the entry and exits and it will tell you the lot size and margin requirements if you’re interested. It’s just a table with simple formulae and pretty colours tbh.
  • #12
  • Last Post: Nov 13, 2019 7:27pm Nov 13, 2019 7:27pm
Quoting Macd-rsi
assume ur position hit margin level of 50% (=your position is closed automatedly by broker due to margin call alarm) -- what will remain of your money?? Ans: Remaining money = SOL*Margin = 0.50*1382 = 691.2 USD!! that mean your equity dropped from 2764 to 691?? Losses = 2764-691 = 2074 USD ===> in % ----> Losses = -75%
Nice. Thanks for the write up. What broker are you using? I'm playing high impact news release and has been fark by brokers with bad fills and huge slippage.
You're going to pay a price for every bloody thing you do and don't do
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