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Margin Calculation Examples Under Professional Trading Terms
Margin Calculation Examples Under Retail Trading Terms
Example 1: Buying a rolling spot FX product
Assuming your account type is Trade.MT4 and its deposit currency is USD, the leverage on major Forex instruments is provided as the per table below and calculated as follows:
| Notional Position Value, USD | Leverage Rate |
|---|---|
| Up to 7,500,000 | 1:500 |
| 7,500,000 — 10,000,000 | 1:200 |
| 10,000,000 — 12,500,000 | 1:50 |
| Over 12,500,000 | 1:10 |
| Margin Group | Leverage Rate |
|---|---|
| FX Majors | 1:30 |
Let`s open a position: Buy 10 lots EURUSD at 1.04440.
The notional position value in the account`s currency (USD) is 10 lots x 100,000 x 1.0444 = 1,044,400 USD, which is less than the first tier of 7,500,000 USD.
Therefore, a leverage of 1:500 is applied to this position and the margin requirements are calculated as 1,044,400 / 500 = 2,088.8 USD.
Let`s open a position: Buy 1 lot EURUSD at 1.04440.
The notional position value in the account`s currency (USD) is 1 lot x 100,000 x 1.0444 = 104,440 USD.
The fixed leverage of 1:30 is applied to this position and the margin requirements are calculated as 104,440 / 30 = 3,481.33 USD.
Example 2: Buying a cash index CFD product
Example 2: Buying a cash index CFD product
Assuming your account type is Trade.MT4 and its deposit currency is USD, the leverage on cash index CFDs is provided as per table below and calculated as follows:
| Notional Position Value, USD | Leverage Rate |
|---|---|
| Up to 500,000 | 1:500 |
| 500,000 — 3,500,000 | 1:200 |
| 3,500,000 — 4,700,000 | 1:50 |
| Over 4,700,000 | 1:10 |
| Notional Position Value, USD | Leverage Rate |
|---|---|
| Major Indices | 1:20 |
Let`s open a position: Buy 100 lots on [GERMANY40] at 11,467.88 while the EURUSD rate in MetaTrader is 1.04440.
[GERMANY40] is quoted in EUR, so the notional position value in the account`s currency (USD) is 100 lots x 11,467.88 x 1.04440 = 1,197,705.39 USD.
The above value is more than the first tier of 500,000 USD, but less than the second tier of 3,500,000 USD.
Therefore, a leverage of 1:500 is applied to the first 500,000 USD of this position and a leverage of 1:200 is applied to the remainder. So, the margin requirements are calculated as 500,000 / 500 + 697,705.39 / 200 = 4,488.53 USD.
Let`s open a position: Buy 10 lots on [GERMANY40] at 11,467.88 while the EURUSD rate in MetaTrader is 1.04440.
[GERMANY40] is quoted in EUR, so the notional position value in the account`s currency (USD) is 10 lots x 11,467.88 x 1.04440 = 119,770.54 USD.
Therefore, a leverage of 1:20 is applied to this position and the margin requirements are calculated as 119,770.54 / 20 = 5,988.53 USD.
Example 3: Selling a metal CFD product and increasing the open position on the same product
Example 3: Selling a metal CFD product
Assuming your account type is Trade.MT4 and its deposit currency is GBP, the leverage on metal CFDs is provided according to the table below as shown in the following two examples.
| Notional Position Value, GBP | Leverage Rate |
|---|---|
| Up to 400,000 | 1:500 |
| 400,000 — 2,500,000 | 1:200 |
| 2,500,000 — 3,300,000 | 1:50 |
| Over 3,300,000 | 1:10 |
| Notional Position Value, GBP | Leverage Rate |
|---|---|
| GOLD | 1:20 |
Example 3.1
Let`s open a position: Sell 25 lots GOLD at 1158.15 while the GBPUSD rate in MetaTrader is 1.22462.
GOLD is quoted in USD, so the notional position value in the account`s currency (GBP) is 25 lots x 100 oz x 1158.15 / 1.22462 = 2,364,304.85 GBP
The above value is more than the first tier of 400,000 GBP, but less than the second tier of 2,500,000 GBP.
Therefore, a leverage of 1:500 is applied to the first 400,000 GBP of this position and a leverage of 1:200 is applied to the remainder. So, the margin requirements are calculated as 400,000 / 500 + 1,964,304.85 / 200 = 10,621.52 GBP.
Let`s open a position: Sell 2 lots GOLD at 1158.15 while the GBPUSD rate in MetaTrader is 1.22462.
GOLD is quoted in USD, so the notional position value in the account`s currency (GBP) is 2 lots x 100 oz x 1158.15 / 1.22462 = 189,144.37 GBP
Therefore, a leverage of 1:20 is applied to this position and the margin requirements are calculated as 189,144.37 / 20 = 9,457.22 GBP.
Example 3.2
Let`s open an additional position on the same instrument, for example: Sell 5 lots GOLD at 1158.15.
GOLD is quoted in USD, so the notional position value in the account`s currency (GBP) is 5 lots x 100 oz x 1158.15 / 1.22462 = 472,860.97 GBP.
The summary notional value of both positions in the account`s currency (GBP) is 2,364,304.85 + 472,860.97 = 2,837,165.82 GBP, which is more than the second tier of 2,500,000 GBP, but less than the third tier of 3,300,000 GBP.
Therefore, a leverage of 1:500 is applied to the first 400,000 GBP of the summary notional value of both positions, while a leverage of 1:200 is applied to the next 2,100,000 GBP and a leverage of 1:50 is applied to the remainder. So, the margin requirements for both positions are calculated as 400,000 / 500 + 2,100,000 / 200 + 337,165.82 / 50 = 18,043.32 GBP.
Example 4: Buying a rolling spot FX product within an hour before the close of the Friday trading session
Assuming your account type is Trade.MT4 and its deposit currency is USD, the margin terms applied to FX majors are the same as shown in Example 1.
Additionally, there is a term which concerns all highly leveraged products according to which positions opened within an hour of the close of the trading session on Fridays will receive a leverage of 1:50—with the exception of positions that open with a lower leverage (e.g. 1:10).
Let`s open a position: Buy 100 lots USDJPY at 117.311 on Friday 23:35 (EET).
According to the Contract Specifications, the trading schedule of USDJPY in EET is 00:05 Mon - 23:59 Fri, therefore our position is subject to the pre-close margining term.
USDJPY is quoted in USD, so the notional position value in the account`s currency (USD) is 100 lots x 100,000 x 1 = 10,000,000 USD, which is less than the fourth tier of 12,500,000 USD—so there is no part of the position to which a leverage of 1:10 should be applied.
Therefore, a leverage of 1:50 is applied to the entire position, with the margin requirements calculated as 10,000,000 / 50 = 200,000 USD.
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