1. Join Date
Mar 2007
Posts
1

## Question about margin, \$ required to put on a trade, etc.

When trading the GBP/USD pair, how much money is required to be in my account to trade:
3 lots with a lot size of 10,000?
5 lots with a lot size of 10,000?
10 lots with a lot size of 10,000?

Given a \$400:1 leverage since it is a mini-account.
And, be able to allow a 50 pip loss?

And, while we're here....what if it isn't a mini-account just a regular account with a 100:1 leverage?
Is there a formula for this type of information?

2. Originally Posted by dbelae
When trading the GBP/USD pair, how much money is required to be in my account to trade:
3 lots with a lot size of 10,000?
5 lots with a lot size of 10,000?
10 lots with a lot size of 10,000?

Given a \$400:1 leverage since it is a mini-account.
And, be able to allow a 50 pip loss?

And, while we're here....what if it isn't a mini-account just a regular account with a 100:1 leverage?
Is there a formula for this type of information?

To answer this question, we will learn how to calculate leverage and margin in general. To simplify, let's first assume you are trading a currency pair where the base currency is USD (i.e. USD/JPY, USD/CHF, USD/CAD). So, you buy one 10K lot of USD/CHF. You are buying US\$10,000 worth of USD and selling US\$10,000 worth of Swiss Francs at the same time. If your margin is set to 400:1 (.25%) then you would take \$10,000 and divide it by 400, which equals \$25. \$25 would be set aside in margin.

If USD is the counter currency (i.e. EUR/USD, GBP/USD, AUD/USD, etc.) then you would need the exchange rate to calculate the margin required. Let's say you buy one 10K lot of GBP/USD. You are buy 10,000 British Pounds and selling the equivalent amount in USD. Assuming the exchange rate is 1.9800, then you are selling US\$19,800 (10,000 GBP x (US\$1.98 per GBP) = US\$19,800). So, you are trading a position worth \$19,800. At 100:1 leverage, your broker would set aside \$198.00 (\$19,800 divided by 100). At 400:1 then your broker would set aside \$49.50 for every 10,000 unit lot you trade of GBP/USD.

So, to answer you first question, assuming an exchange rate of 1.9800 for GBP/USD then your broker would set aside \$148.50 for 3 mini lots, \$247.50 for 5 mini lots, and \$495.00 for 10 mini lots at 400:1 leverage.

I hope this helps. You can find more information on leverage by visiting our lesson: "Leverage the Killer" in the School of Pipsology.

3. Newbie
Join Date
Apr 2007
Posts
10
It doesn't really matter how much leverage your broker gives you - 100:1 or 400:1
When trading GBP/USD with minilots 1 pip equals \$1
So, 50 pips loss will be \$50 for 1 minilot, \$150 for 3, 250 for 5 and 500 for 10 minilots or 1 standard lot
Now, let's say you're willing to risk 2% of your account on each trade
\$150/.02=\$7500
\$250/.02=\$12500 and so on
If you can risk only 1% on each trade you need twice as much money on your account
Hope this is clear
Good luck!

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