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What is a Margin?

Margin is a portion of the trader’s account balance that their Forex broker sets aside to ensure that the trade can cover the potential loss of the trade.

Margin is not a fee or a cost. It is essentially a portion of your funds that is locked up by the broker for the duration of the specific trade.

Once the trade is closed, the margin is released back into the trading account and the trader can then use it again, to open new trades. Leveraged trading is also called margin trading.

what is forex margin

How does the Margin calculator work?

Opening a trade with too much margin can lead to a margin call. While opening a trade with insufficient margin can lead to profitable trade with no actual impact on your trading account.

Use our margin calculator to determine how much margin you need to open and hold your Forex trading positions.

Enter the base currency of your account

Choose the currency pair you are looking to trade

Select the leverage (also known as margin ratio)

Enter the size of your position in lots

Click the 'Calculate' button and watch the magic happen


Calculating Margin when trading Forex

To calculate required margin, the following variables are required: account base currency, trading instrument (e.g. currency pair), leverage ratio and trading volume (lots). The following formula is used to calculate margin:

Margin = ([{Base Currency} ÷ {Account Currency}] x Units) / Leverage

Let's say you want to open a trade position, long or short, of 1 standard lot (100,000 units) of GBP/USD, on a 50:1 leverage trading account, and with the current GBP/USD exchange rate at 1.43861.

Required Margin = 100,000 units ÷ 50 ✕ 1.43861

Required Margin = $2,877

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