Margin Calculation Method

Blogging and Forex ZRGRZMXMFVK3,Margin Calculation Method

There are three types of Currency Pair (Pair):

Direct Rates
Is a pair with USD as the counter currency (USD is located in the rear), example: GBP / USD, EUR / USD, AUD / USD, and NZD / USD
Indirect Rates
Is a pair with USD as the base currency (USD is situated in front), example: USD / JPY, USD / CHF, USD / CAD
Cross Rates
Pairs which did not contain the USD, for example: GBP / JPY, EUR / JPY, AUD / JPY, EUR / GBP, and GBP / CHF

Margin Calculation Method Direct Rates (GBP / USD, EUR / USD, AUD / USD, and NZD / USD):

Margin Percentage x Contract Size x Lot x Price Now = Margin

Example:

Sell ​​3 mini lots GBP / USD at Bid 2.0000 (Remember to use the bid open-Sell!)
0.01 x 10,000 x 3 x 2.0000 = 600 USD (leverage 1:100)
0002 x 10,000 x 3 x 2.0000 = $ 120 (Leverage 1:500) -> Needs a margin less than 1:100!

Margin Calculation Method Indirect Rates (USD / JPY, USD / CHF, USD / CAD):

Margin Percentage x Contract Size x Lot = Margin

Example:

Buy 2 mini lots of USD / JPY at 110.00 Ask (Remember to use the ask price of open Buy!)
0.01 x 10,000 x 2 = 200 USD (leverage 1:100)
0002 x 10,000 x 2 = $ 40 (Leverage 1:500) -> Needs a margin less than 1:100!

Margin Calculation Method Cross Rates (GBP / JPY, EUR / JPY, AUD / JPY, EUR / GBP, and GBP / CHF):

Margin Percentage x Contract Size x Price x Lot Middle (*) Now = Margin

Middle Price (*) = (Price Bid Price + Ask) / 2

(Do not forget Base Currency Currency is the basis of which lies in front of the pair. For example, pair EUR / USD -> EUR is the Base Currency, GBP is a QUOTE Currency)

Example:

Buy 1 mini lot EUR / GBP at 0.8020 Ask price (Remember to use the ask price of open Buy!)
Bid / Ask EUR / USD 1.5800/02 (because the Base Currency is the EUR, the price used is the price of EUR / USD)

Price was EUR / USD = (1.5800 + 1.5802) / 2 = 1.5801

0.01 x 10,000 x 1 x 1.5801 = 158.01 USD (leverage 1:100)
0002 x 10,000 x 1 x 1.5801 = $ 31.60 (Leverage 1:500) -> Needs a margin less than 1:100!

From the example above, we see that by using greater leverage, margin / capital needed for collateral is less