Little observation

hello, how are you today, i hope well :slight_smile:

i just sign demo account and find misunderstanding about leverage and margin, i hope i can find help :smiley:

according to post on forex school about “Forex Margin Call Explained”

if i have 1:100 leverage and equity 10000, and if i buy/sell 1 lot,my used Margin is now $100

ok, i have 1000$, 1:100 leverage, in my demo, i just test to sell 1 lot and, my used Margin is now $246


why my used margin is 246, not 10$

thank you :slight_smile:

Hello,
From the definition “Margin is the amount of money needed as a “good faith deposit” to open a position with your broker”, you can see that your margin is not your main balance. It is the amount required to open a certain trade. Leverage does affect your margin.
Source: Forex Leverage and Margin Explained

For example:
With a leverage of 1:500, you need about $246 to open EURUSD 1lot position. With a leverage of 1:100, you need about $1229 margin to open the same position. Required margin to open a certain position also depends on the currency pair and the current price of the currency pair. It is very easy for you to calculate this when you use a calculator here: Trading Strategy Calculator - Profiforex Forex Broker

The size of your deposit is irrelevant to the margin applied for the same currency pair using the same lot size. So if your balance is $1,000, $10,000 or $100,000 and you are buying 1.0 lot of currency pair xyz the margin required will be the same (not sure if made a type and forgot the third 0 or if you thought there is a difference).

The amount needed always depends on the currency pair you trade. For example selling 1.0 lot EURUSD and selling 1.0 lot NZDJPY will carry a different margin requirement.

thank @ Profiforex
thank @ TheLastBear’s

for reply :smiley:

I think I began to understand about margin & leverage :slight_smile: