Forex Margin Calculator
The Forex Margin Calculator by FinanceBrokerage is determined to guide you through the most vital concepts of forex: forex margin and marginal trade. Margin is an insurance that you must maintain on your account for opening positions. The Margin Calculator works out exactly how much margin do you need in order to open a particular position.
Since forex trade carries a high level of risk, you must determine if you need to reduce the lot size (trade size) or you can afford to trade more. In fact, the forex margin determines if you can afford to enter the trade. In fact, that is why it is so important for a trader.
How to use the calculator
To use Forex Margin calculator, please follow the simple steps:
- Select currency pair you trade with;
- Select your base currency (or account currency);
- Enter the present exchange rate;
- Select the leverage provided to you by your broker;
- Enter the trade size (the amount you would like to purchase);
- Hit calculate.
What is Margin in Forex?
Every forex trader must acknowledge the concept of the forex margin. When trading forex you don’t need to put the whole amount of money, but you need to put a small amount to open and maintain a new position. In fact, during the marginal trade, you only need to pay a percentage of the full value to enter the trade.
The Forex Margin Formula
Notably, the formula for calculating margin in forex is remarkably simple:
Required Margin = Trade Size / Leverage * Exchange Rate
Where: Trade size – is the volume of trade in monetary expression; Leverage – is the financial shoulder provided to you by your broker; Exchange rate – is the rate applicable for currency pair you trade with.
Assume you are trading EUR/USD, the rate applicable for instance is 1.1246. Also, your broker granted you the leverage of 1:100 and the transaction volume is 5 000 USD.
Calculation will be as folows: 5 000/100*1.1246=56.23$ – it means that for the opening position you need to have 56.23$.
We hope the forex margin calculator will be a useful tool for the forex trade.
To calculate the potential profit or loss from trade please visit our forex profit calculator.