How to calculate the margin of a FX position

The following formula is used to calculate the margin required to open a Forex position:

Position size / Leverage = Margin in base currency of the pair

If your account currency is different from the base currency of the pair traded, you’ll need to convert the amount obtained from the above formula in your account currency.

How to calculate the margin of a non-FX position

The following formula is used to calculate the margin required to open a non-Forex position:

(Position size * Instrument price) / Leverage = Margin in the currency upon which the instrument is quoted

If your account currency is different from the currency upon which the instrument is quoted, you’ll need to convert the amount obtained from the above formula in your account currency.

Margin calculation example of a FX position

Let’s say you want to open a 1 lot position for EURZAR pair and your account currency is USD. The account leverage is 50 and the current EURUSD rate is 1.25.

The margin required to open the position is:

100,000 / 50 = 2000 €

2000 * 1.25 = 2500 US$

Margin calculation example of a non-FX position

Let’s say you want to open a 1 lot (1,000 barrels) position on OIL/USD instrument with a quoted price of 70$ and your account currency is USD. The account leverage is 50.

The margin required to open the position is:

(1,000 * 70) / 50 = 1400 $