Margin is the amount of money on the account, which is blocked at the opening of any position (trade order). It acts as a kind of collateral for the transaction(s).

It is calculated according to the following formula:

Margin = (opening volume of the transaction * 100 000 base currency * Opening price) / leverage

Note: The opening price is used for calculations if the deposit currency does not match the base currency in the currency pair.

Let's look at examples:

Example 1.

Deposit currency USD; leverage 1:100; trade volume 0.5 lots; GBP/USD: GBP/USD (bid1.38700/ask 1.38730).

Buy (ask):

Margin = (0.5 * 100,000 * 1.38730) / 100 = 693.65 USD

Sell (bid):

Margin = (0.5 * 100,000 * 1.38700) / 100 = 693.5 USD

Example 2.

Deposit currency USD; leverage 1:100; volume 0.3 lots; USD/CHF: USD/CHF exchange rate (bid 0.93880/ask 0.93890). The opening price will not be used in the calculations, as the deposit currency matches with the base currency of the currency pair.

Buy (ask):

Margin = 0.3 * 100 000 / 100 = 300 USD

Sell (bid):

Margin = 0.3 * 100 000 / 100 = 300 USD

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