Forex Margin Calculator
Use this precise forex margin calculator to help you determine how much capital is used to open a trade, based on the position size and trading account leverage.
What is Forex Leverage
Forex leverage allows retail investors to open larger positions, with a small amount of the account equity (margin). Leverage, in forex CFDs trading, greatly boosts both profits and losses. CFDs leveraged trading is also called margin trading.
The risk of using high leverage ratios in FX trading, discounting the potential for huge profits, is also the potential for huge losses, ultimately, resulting on the total loss of the account’s capital.
For example, buying a leveraged CFD contract, of 0.01 lot of EUR/USD, at 1.0000 with no leverage (1:1), will require US$ 1,000 capital. To lose completely your capital, the EUR/USD price must go to zero, or to 2.0000, to double your investment. If you trade using a 100:1 leverage ratio, a price movement of 100 times less will result in the same profit or loss.
How Does Forex Leverage Works
A standard lot in forex trading is 100,000 currency units, with the value of US$ 100,000. Of course, almost none of the retail investors have such available capital to trade. That’s why CFD brokers offer leveraged trade to retail investors.
With a 100:1 leverage ratio a retail investor can trade a position 100 times greater than they could without leverage. For example, if the cost to purchase 1 lot of EUR/USD without leverage is US$ 100,000 and the CFDs broker is offering a trading account with a 100:1 leverage ratio, then the retail investor only needs US$ 1,000 capital to open a same value position.
This means that with US$ 1,000 the investor is entering a long EUR/USD position of 1 lot (100,000 units) with a value of US$ 100,000.
But be cautious. Because of the characteristic price swings, and the extreme volatility common with forex trading, a higher leverage ratio also means higher risks. Most professional traders use a very low leverage ratio (2:1), or none at all, and a balanced risk percentage per trade.
What is FX Margin
FX margin is the portion of the account’s capital used by a trader to open a new position. This capital, used as margin, it’s not a fee or a cost, and it’s released once the trade is closed. FX margin’s purpose is to protect the broker from losses, caused by traders.
For example, when a trader has a losing position and the available account margin falls below a pre-defined stop-out percentage, one, or all open positions, are automatically closed by the broker. The broker may, or may not, issue a margin call warning preceding such liquidation.
We recommend a further reading of our What is Leverage in Forex and How to Use It article for more detailed information on leverage, margin and lots.
How to Use the Forex Margin Calculator
This forex margin calculator is useful to help you calculate the amount of your account’s margin needed to open a trade, based on the lot size and trading account leverage. Now that you are familiar with the concepts of leverage and margin in forex CFDs trading, let’s see how to use our calculator, field by field.
Currency pair: In this field traders can select from the most popular cryptocurrencies (DOGE, BTC, XRP, ETH, etc.) versus the main fiat currencies, or the Major forex crosses and Minor pairs, the most popular indices and Gold/Silver. For our example, we will choose the GBP/USD cross.
Deposit currency: Margin values differ for each forex cross, or any other financial instrument, and are subject to its base currency actual market quote. The margin calculator is ready for most deposit currencies, including also trading accounts in crypto and fiat currencies, from AUD to ZAR. We will choose the USD as the deposit currency.
Leverage: In this field just input your current leverage ratio, offered by your broker, or you can simulate various scenarios, by selecting from a range of 1:1 (no leverage) to a maximum of 600:1, to know how much margin will be used to open a position with different leverage options. For our example, we will select a leverage of 30:1.
Lots (trade size): One standard lot in forex is 100,000 currency units. However, units per 1 lot vary for the non-forex pairs. Please refer to the contract specs for more info. In this field there’s also an option to calculate the profit value based on the units traded (simply click the cog wheel and switch to units). For our example, we will select a trade size of 0.02 lot (2,000 currency units).
And now, to find out how much margin this position would require, we hit the "Calculate" button.
The results: The calculator will display the results in the selected deposit currency. For our example, to open a trade position, long or short, of a 0.02 lot GBP/USD, on a 30:1 leverage trading account, and with the current GBP/USD exchange rate at 1.41367, we would need a margin of US$ 94.24.
Add this Forex Margin Calculator to Your Website
Our set of calculators work with live market rates, allowing traders to get always the most accurate calculations possible. These calculators work with most forex pairs (Major and Minor crosses), and also with metals, world indices and with the most popular cryptocurrencies: BTC, DOGE, XRP, LTC, ETH, etc.
Not only it is possible to calculate with precision what would be the margin required to open a DOGE/USD trade, or a 0.50 lot long AUD/USD trade, based on your leverage ratio and lot size, for example, but also, these great calculators are localised in 23 different languages, including Chinese, Russian, Arabic, and Japanese.
With a user-friendly interface and an intuitive design, these tools can be easily customized and embedded with any web page. The great advantage of our tools is that they are completely unbranded, without any 3rd party logos. Plus, these tools can be fully customized to match the colour scheme and the layout of any web page.
If you consider that this complete suite of calculators might create added value for your web pages, or to simply complement a "Tools/Calculators" section of your portal, you are free to embed them on your website.
All the widgets can be used and embedded as they are, or they can be fully customized to suit your website’s colours. After configuring the settings, simply copy/paste the final code to embed the tool/calculator widget on your web page.
Our Leverage & Margin Calculator is powered by CBFX trading tools.