How much margin is required to open a trade?

If you trade in MetaTrader 4 or 5, it’s essential to understand how to calculate the required margin and leverage for each instrument. This will help you manage your risk more effectively and make the most of your available capital.

What is margin in MetaTrader?

Margin is the amount of funds reserved for opening a trade. The size of the margin depends on the trade volume and leverage. The leverage for each instrument can be found om the CFD Specification page.

For example, if your leverage is 1:1000, this means you only need 1/1000 of the total trade value as margin. In other words, you can control a larger position with a smaller amount of your real funds.

How to calculate the required margin amount?

To calculate the minimum amount of margin required for a trade, you can use the next formula:

Margin Required = Nominal Value ÷ Leverage

• Nominal Value = the total value of your position
  

• Leverage = your account leverage

Moreover, the required amount of margin depends on the type of the instrument:

• Direct Quote Pairs (EUR/USD, GBP/USD, etc.) → Current Price × Contract size / Leverage
  
  

• Inverse Quote Pairs (USD/JPY, USD/CHF, etc.) → Contract size / Leverage
  
  

• Cross Currency Pairs (EUR/JPY, GPB/CAD, etc.) → Current Price × Contract size / Leverage / Price of Quoted Currency
  

• Indices, Commodities, Energies, Cryptos →  Contract size × Instrument price / Leverage (same formula as for Direct Quote Pairs)

Example 1: EUR/USD

Let’s say you want to open a trade on EUR/USD with a volume of 1 lot at a price of 1.18250. Leverage for this instrument is 1:1000

Formula of margin = Current Price × Contract size / Leverage

• 1 lot = 100,000 (contact size in specification) units of the base currency (EUR in this case)
  

Margin Required = 1.18250 × 100,000 ÷ 1000 = 118.25 USD
This means you only need USD 118.25 as margin to trade one full lot of EUR/USD.

Example 2: USD/CHF

Let’s say you want to open a trade on USD/CHF with a volume of 1 lot at a price of 0.79300. Leverage for this instrument is 1:1000

Formula of margin = Contract size / Leverage

• 1 lot = 100,000 (contact size in specification) units of the base currency (USD in this case)
  
  

Margin Required = 100,000 ÷ 1000 = 100 USD
This means you only need USD 100 as margin to trade one full lot of USD/CHF

Dynamic tiered Leverage System at LBX

LBX offers a dynamic tiered leverage system that adjusts based on your current net equity and the asset class you are trading. This means the leverage available to you can change, which affects the margin required for each trade.

For example, consider the EURUSD instrument:

• Its leverage is 1:1000, as long as your account equity does not exceed $50,000 USD.

• If your account equity exceeds this amount, the leverage for this instrument becomes 1:500, meaning you’ll need twice as much margin to open the same position.

For more details, see our guide: Understanding Leverage at LBX