AUDSEK Margin & leverage calculator
Forex margin calculator
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Use this handy Forex Margin Calculator to calculate accurately the amount of funds required to open a trading position, or used to open a new trade, based on the lot size and the available leverage offered by your broker.
What is Leverage & Margin
Leverage allows a trader to control a larger position using less money (margin) and therefore greatly amplifies both profits and losses. Leveraged trading is also called margin trading.
Leverage will amplify potential profits and losses. For example, buying the EUR/USD at 1.0000 with no leverage, to take a total loss the price must go to zero, or to 2.0000 to double your investment. If you trade using the full 100:1 leverage, a price movement of 100 times less will produce the same profit or loss.
Margin is the capital a trader must put up to open a new position. It is not a fee or cost and is freed up again once the trade is closed. Its purpose is to protect the broker from losses. When losses cause a trader's margin to fall below a pre-defined stop out percentage, one or all open positions are automatically closed by the broker. A margin call warning from the broker may or may not precede such a liquidation.
How Does Leverage Work
With 100:1 leverage a trader can open a position 100 times greater than they could without leverage. For example, if the cost to purchase .01 lots of EUR/USD is normally $1000 and the broker offers 100:1 leverage, then the trader must put up only $10 as margin. Of course, the trader can use as little leverage as they want.
Beware: Higher leverage means higher risk. Most professionals use a very low leverage ratio, or none at all, and a modest risk percentage per trade.
For more on leverage check out our article What is Leverage in Forex and How to Use It.
How to Use the Forex Margin Calculator
Currency pair: In this field traders can select from several Major Forex crosses, some Minor pairs, from the most popular cryptocurrencies versus the USD (BTC, ETH, LTC, Stellar and Ripple), and Gold/Silver versus the USD. For our example, let's choose the EUR/USD.
Deposit currency: Margin values are different for each Forex pair, or any other financial instrument, and subject to its current market quote. By selecting the deposit currency, it will be possible to accurately display the margin amount of the selected instrument in the trader's account base currency (from AUD to ZAR). We will choose GBP as our deposit currency, for this example.
Leverage: In this field traders just need to input their current leverage, offered by their broker, or they can choose from a range of 1:1 to a maximum of 600:1 to simulate the amount of margin used to open a position with different leverage options. For our example, we will select a leverage of 30:1.
Lots (trade size): Simply type in the lot size. Remember, one standard lot of a Forex pair is 100,000 units per 1 lot, but units per 1 lot vary for the non-forex pairs. In this field there's also the option of switching between lots or units for the calculations. For our example, we will use a trade size of 0.10.
Next, we click the "Calculate" button.
The results: Using all the formulas illustrated above, and the data supplied, the Forex Margin Calculator tell us that to open a trade position, long or short, of a 0.10 lot EUR/USD, with a 30:1 leverage trading account, and with the current EUR/GBP exchange rate of 0.90367, we would need a margin of £ 301.22.
You might also find our What is Leverage in Forex and How to Use It article useful. It has information that can help traders to understand how leverage has a direct effect on their trading account's capital, what is the leverage in Forex and how to use it safely in FX trading, what is a margin call, how to avoid a margin call and so much more.
Use this Forex Margin Calculator on Your Website
Our tools and calculators are developed and built to help the trading community to better understand the particulars that can affect their account balance and to help them on their overall trading.
Regardless if investors trade the Forex market, cryptocurrencies or any other financial instruments, our complete suite of accurate Forex tools and calculators are programmed to work with any data inputted.
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