How to calculate the minimum amount required to place order?
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Trading is risky. Your capital is at risk.
To trade in financial markets, you need to know the minimum amount to open a trade. This depends on trade size, leverage, and the asset's price. We'll explain how to calculate the margin with examples.
Formula: Margin = V (lots) × Contract size per lot / Leverage
Where:
- Margin - the required amount to open a trade.
- V (lots) - volume in lots.
- Contract size per lot - 100,000 units of the base currency.
- Leverage - allows increasing position size using borrowed funds.
Base currency is the first in the pair, e.g.:
EURUSD - EUR;
USDJPY - USD.
Convert margin to deposit currency (USD, EUR, etc.) based on the current rate.
Example #1. Margin Calculation for Currency Pairs
- Instrument - EURUSD;
- Volume - 0.1 lots;
- Contract size - 100,000 EUR;
- Leverage - 1:100;
- EURUSD rate - 1.35400;
- Deposit currency - USD.
Calculation:
- Margin = 0.1 × 100,000 EUR / 100 = 100 EUR.
- In USD: 100 EUR × 1.35400 = 135.40 USD.
Example #2. Margin Calculation for Cross-Rate Pairs
- Instrument - AUDCAD;
- Volume - 0.1 lots;
- Contract size - 100,000 AUD;
- Leverage - 1:100;
- AUDCAD rate - 0.99484;
- AUDUSD rate - 0.78373;
- Deposit currency - USD.
Calculation:
- Margin = 0.1 × 100,000 AUD / 100 = 100 AUD.
- In USD: 100 AUD × 0.78373 = 78.37 USD.
Example #3. Margin Calculation for Spot Metals
- Instrument - XAUUSD;
- Volume - 0.1 lots;
- Contract - 100 troy oz;
- Leverage - 1:500;
- Price - 1332.442;
- Deposit currency - USD.
Calculation:
- Margin = 0.1 × 100 oz × 1332.442 / 500 = 26.65 USD.
Example #4. Margin Calculation for Cryptocurrencies
- Instrument - XBNUSD;
- Volume - 0.1 lots;
- Price - 998.500;
- Deposit currency - USD.
Calculation:
- Margin = 0.1 × 1 × 998.500 × 50% = 49.93 USD.
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