Margin is the amount of funds required to open and maintain a trade. The margin required depends on the instrument, position size, open price, applicable leverage or margin rate, and the instrument's margin calculation method.
What details do I need to calculate margin?
To estimate the margin requirement, you may need:
- Contract size
- Lot size
- Open price
- Margin percentage
- Applicable leverage
- Margin calculation method
You can find these details in MetaTrader 4 (MT4) or MetaTrader 5 (MT5), by right-clicking the instrument in Market Watch and selecting Specification.
Which margin formula should I use?
Different instruments may use different margin calculation methods. The applicable method determines which formula you should use. Check the instrument's Specification to identify the applicable method.
- Forex
Margin = Contract Size × Lot Size × Margin Percentage ÷ Leverage
- CFD
Margin = Contract Size × Open Price × Lot Size × Margin Percentage
- CFD with Leverage
Margin = Contract Size × Open Price × Lot Size × Margin Percentage ÷ Leverage
Whether leverage is used depends on the instrument’s calculation mode. Check the instrument’s Specification before applying a formula.
How does account currency affect margin?
If the margin calculation produces an amount in a currency different from your trading account's base currency, the amount may be converted into your account currency using the applicable exchange rate.
For example, if your account is denominated in USD but the calculated margin is in GBP, the GBP amount may be converted to USD.
The final margin requirement may therefore change as the applicable exchange rate changes.
Why can my margin requirement change?
Depending on the calculation method, margin may change when:
- The price used in the calculation changes.
- The applicable leverage or margin rate changes.
- A conversion rate changes between the margin and account currencies.
- Temporary or Dynamic Leverage conditions apply.
The calculation method determines which changes affect a particular position.
Is margin a trading fee?
No. Margin is the amount required to support a position, rather than a fee for opening it.
When a position is closed, the margin associated with it is released, subject to any resulting profit or loss and other account conditions.
Margin is also different from free margin:
- Margin is the amount used to support your open positions.
- Free margin is the amount available to open additional positions or absorb floating losses.
The margin required to open a position does not represent the maximum amount you can lose.
How can I check my instrument's margin specifications?
On MT4 or MT5 desktop
- Open Market Watch.
- Right-click the instrument and select Specification.
- Review the contract size, calculation method, margin currency and applicable margin settings.
On MT4 or MT5 mobile
- Open Quotes.
- Tap the instrument and select Properties.
- Review the available contract and margin specifications.
Use your account's applicable leverage alongside these specifications. Free margin is the amount available after the margin used by existing positions is taken into account; it is different from the margin requirement for a new trade.
