In the forex market, margin is the amount of capital required to open a leveraged position. It allows traders to control larger positions with a smaller deposit.

• Without Leverage:
  To trade 1 standard lot (100,000 units), you would need the full contract value, e.g., $100,000.
• With Leverage:
  Leverage reduces the required margin. For example, with 1:100 leverage, a $100,000 trade only requires $1,000 in margin.

Why Margin Matters:
Leverage enables traders to enter positions with minimal initial capital, but higher leverage also increases potential risk. Always adjust leverage to match your risk tolerance and trading strategy.

How Margin is Calculated

1. Floating Leverage (Common Forex Pairs & Gold):$$\text{Margin} = \frac{\text{Contract Size × Lots × Margin Percentage}}{\text{Account Leverage}}$$Margin=Account LeverageContract Size × Lots × Margin Percentage​

• For CFDs:

$$\text{Margin} = \frac{\text{Opening Price × Lot Size × Contract Size}}{\text{Leverage}}$$Margin=LeverageOpening Price × Lot Size × Contract Size​

• You can view your account leverage in the Client Portal.

2. Fixed Leverage (Exotic Pairs & Other Products):$$\text{Margin} = \text{Opening Price × Lot Size × Contract Size × Margin Percentage}$$Margin=Opening Price × Lot Size × Contract Size × Margin Percentage

• For CFD (Margin Initial):

$$\text{Margin} = \text{Margin Initial × Lots × Margin Percentage}$$Margin=Margin Initial × Lots × Margin Percentage

• Check the MT4 “Specification” tab for the margin percentage and margin type.

Example:

• EURUSD price: 1.07390 / 1.07401
• 1 lot sell order without leverage:

$$\text{Margin} = 1.07390 × 1 × 100,000 = 107,390 USD$$Margin=1.07390×1×100,000=107,390USD

• With 1:100 leverage:

$$\text{Margin} = \frac{1.07390 × 1 × 100,000}{100} = 1,073.90 USD$$Margin=1001.07390×1×100,000​=1,073.90USD

As the example shows, leverage reduces the margin required to open a position, but it also increases risk.