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Calculate Margin Call Price

  • #1
  • First Post: Sep 25, 2007 7:15am Sep 25, 2007 7:15am
Can anyone tell me how i calculate the price at which a margin call would occur. i.e. if the price moved from the current price to this calculated price there would be a margin call

I guess i know these things:
1)my brokers minimum margin level is 100%.
2)my current equity, say 5540
3)the current price, say 231.60
4)the current margin, say 400
5)the current number of lots purchased (assume 1 pair) 0.4 or 40000
6)the current free margin, say 5142
??not sure what else i might need

I am sure this is easy, i just keep getting it wrong. I was putting this in an indicator to help me work out if there was any room for new positions to be added.
  • #2
  • Edited 7:51am Sep 25, 2007 7:28am | Edited 7:51am
Quoting thebts
Can anyone tell me how i calculate the price at which a margin call would occur. i.e. if the price moved from the current price to this calculated price there would be a margin call

I guess i know these things:
1)my brokers minimum margin level is 100%.
2)my current equity, say 5540
3)the current price, say 231.60
4)the current margin, say 400
5)the current number of lots purchased (assume 1 pair) 0.4 or 40000
6)the current free margin, say 5142
??not sure what else i might need

I am sure this is easy, i just keep getting it wrong. I was putting this in an indicator to help me work out if there was any room for new positions to be added.
Here is an excerpt from a document I wrote on margin:

Margin Call: A margin call is a dire situation where your account balance has dropped to the level of your initial margin deposit. Large traders in good standing may receive a phone call demanding an additional deposit or face the liquidation of an existing position. For retail traders, the broker will simply liquidate your position without any advance warning. Not only does this protect them, but it also affords the trader some level of protection. At 100:1 leverage, a margin call implies that you just drained 90% of your account (assuming a single position). Walking away with 10% is a nice consolation prize. Your broker has loaned you a staggering amount of capital, and a margin call is his way of protecting that loan.

Margin is calculated as follows:

((Currency Quote x Contract Notional Value) / leverage) / Current Counter Currency Rate

Let’s go through the example in the image below:

Assume the GBPJPY is trading at 232.35, we trade 2 standard contract and that our broker offers us 50:1 leverage.
((232.35 x 200,000)/50) = 929400 The counter currency is in JPY and we must convert that to USD. To do so, we divide by the current USDJPY rate of 119.18. So, 929400 / 119.18 = $7798. This leaves you a mere $2202 USD in your account or 131 pips. Given that the GBPJPY routinely moves 200 pips per day, 131 pips to liquidation does not offer you a substantial edge in your profit-making endeavors.

For pairs where the USD is already the base currency, the margin is simply the percentage of the notional contract value. For example: The USDCHF is trading at 1.2358, you have 100:1 leverage and a $10,000 account.
((1.2358 x 100000)/100) = 1235.8
Now, divide by the current counter currency rate of 1.2358: 1235.8/1.2358 = 1000 USD or 1% of the notional value of 100,000.

I have a calculator that will do this for you. PM me if you want it.
  • #3
  • Nov 2, 2007 3:38pm Nov 2, 2007 3:38pm
could someone make it an indictor, please ?
  • #4
  • Nov 2, 2007 6:56pm Nov 2, 2007 6:56pm
This is a script.

Load it up.
It asks for Free Margin/Equity you have.
It asks for the Leverage you have 10, 50, 100, 200, 400, etc..
It asks for the StopLoss you want (ie how much pips it goes against you before it calls a Margin Call).

Bang up your lots.
Attached File(s)
File Type: ex4 Margin Calc.ex4   2 KB | 2,163 downloads
  • #5
  • Mar 29, 2008 3:55am Mar 29, 2008 3:55am
Quoting philmcgrew

At 100:1 leverage, a margin call implies that you just drained 90% of your account (assuming a single position).
How do you come up with 90%?
  • #6
  • Mar 29, 2008 8:37am Mar 29, 2008 8:37am
Quoting ForexWindo
How do you come up with 90%?
10% of your account was reserved for margin. The most you can lose is the remaning 90%.
  • #7
  • May 17, 2012 12:28am May 17, 2012 12:28am
Quoting philmcgrew
Here is an excerpt from a document I wrote on margin:

Margin Call: A margin call is a dire situation where your account balance has dropped to the level of your initial margin deposit. Large traders in good standing may receive a phone call demanding an additional deposit or face the liquidation of an existing position. For retail traders, the broker will simply liquidate your position without any advance warning. Not only does this protect them, but it also affords the trader some level of protection. At 100:1 leverage, a margin call implies...

Hi Phil, i cant PM you as i'm a new member. I would very much like to see your calculator for this margin calculation! Thanks!!!
  • #8
  • Nov 17, 2012 9:26pm Nov 17, 2012 9:26pm
Quoting thebts
Can anyone tell me how i calculate the price at which a margin call would occur. i.e. if the price moved from the current price to this calculated price there would be a margin call

I guess i know these things:
1)my brokers minimum margin level is 100%.
2)my current equity, say 5540
3)the current price, say 231.60
4)the current margin, say 400
5)the current number of lots purchased (assume 1 pair) 0.4 or 40000
6)the current free margin, say 5142
??not sure what else i might need

I am sure this is easy, i just keep getting it wrong. I was putting...
assuming your dominating currency is: USD
for 100% MarginLevel - Like FXSOL+FXCM+Forex.com
Pips for MarginCallPrice = FreeMargin/(#OfLots * OnePipValue)
= (Balance-1.00 *Margin) /(#OfLots * OnePipValue in USD)

for Other Margin Levels (of course less than 100 %) - Like alpari, MIGBank, ....

For Alpari -- MarginLevel = 20%
Pips for MarginCallPrice = (Balance-0.20*Margin) /(#OfLots * OnePipValue in USD)

Now,m either add or subtract Pips for MarginCallPrice from entry price, if it was sell or buy respectively.
  • #9
  • Nov 17, 2012 9:29pm Nov 17, 2012 9:29pm
Quoting Adv

= (Balance-1.00 *Margin) /(#OfLots * OnePipValue in USD)
= (Balance-0.20 *Margin) /(#OfLots * OnePipValue in USD)
As a general Rule;

= (Balance-ML%/100 *Margin) /(#OfLots * OnePipValue in USD)
ML = Margin Level

with alpari -------- ML = 20
With Forex.com ------ML = 100
With MigBank ------ML = 10 ------------ VERY DANGEROUS
  • #10
  • Nov 17, 2012 9:34pm Nov 17, 2012 9:34pm
Quoting philmcgrew
10% of your account was reserved for margin. The most you can lose is the remaning 90%.
That is absolutely not true

it depends on the broker Margin Level

yoy will be true if all brokers rovide 100% Margin Level --- But that not the case.

fore example if the member has an account with VANTAGE(ML= 50% ) , YOUR ANSWER HERE IS MISLEADING


The absolute correct answer is: the remaining = ML/100 * Margin

if ML = 100 % , your answer will be correct, otherwise it is wrong.
  • #11
  • Jul 2, 2016 2:57am Jul 2, 2016 2:57am
Hey guys, i have this big question and im still very unclear about it on the internet but still havent got a grasp of it clearly. I have no idea how does Margin, Free Margin and Margin Level works or calculated. I don't recall buying any standard lots, mini lots or micro lots.

Im Trading in the AUD/JPY

LOSS: -84.93

Balance: 503.51
Equity: 418.58
Free Margin : 28.58
Margin Level (%) : 107.33
Margin : 390
Leverage: 1:10

I have open 5 trades in total.

Trade 1: AUDJPYx sell 0.01 = -0.15
76.75
Trade 2: AUDJPYx buy 0.10 = -21.56
79.08
Trade 3: AUDJPYx buy 0.10 = -21.07
79.03
Trade 4: AUDJPYx buy 0.10 = -21.17
79.04
Trade 5: AUDJPYx buy 0.10 = -20.98
79.02

Margin call & Stop Out = 50%
  • #12
  • Last Post: Nov 20, 2016 2:54am Nov 20, 2016 2:54am
Hi guys,

I dont know if I this question is suitable for this thread, but I will try. Because if I dont ask answer is still no.

So I need help with margin formula with multiple trades when Im buying/ selling, just averagng my entry level.

USDCAD
Price l volume l margin
1. buy at 1.3510 0,01 ?
2. buy at 1.3520 0,01
3. buy at 1.3530 0,02
4. buy at 1.3550 0,03
5. buy at 1.3570 0,05

Do you know how to count formula from some weighted average after this move and rising volume. I need to put in my excel.

Thank you
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