Margin Call - are my calculations correct on USDJPY

Beginner Questions
1

I am a beginner currency trader, focussing only on USDJPY.

I am trying to calculate total money I need (as potential useable margin and margin), to accommodate market swings.

The scenario is:
Long USDJPY,
Margin required is 0.5%,
For minimum position size of 50K, minimum margin required is 0.5%, that will be 1:1000, that will be 50USD.
(I will be using IG)

Goal calculation = how much movement and how much $ margin required for that movement.
(right now USDJPY is approximately 130.00).

Scenario 1: 50 pips movements, how much USD is needed for potential margin?

1 pips = 0.01 JPYUSD - 1 JPY = 0.009 USD - 1 pips = 0.09/10 JPY = 0.009 JPY or 0.00008 USD,
50 pips = 0.004 USD.
With leverage of 1:200, 50 pips = 0.8 USD.
Lot size = 0.05 x 100,000 = 50,000
0.8*50K = 4K
Margin required on 4K = 0.5% = 20USD. <Is this correct?

100 pips needs how many dollar of margin?
1 pip = 0.00008 USD
100 pips = 0.00008 USD x 100 = 0.008 USD
With leverage of 1:200, 100 pips = 0.008USD x 200 LEVERAGE = 0.8 USD.
With lot size of 0.05 x 1000,000 = 50,000,100 pips = 0.8USD x 50,000 units = 40K.
Using 0.5% margin, 40K requires, 200USD deposit. <Is this correct?

Thanks.

2

0.5% margin (that is, ½ of 1%) corresponds to maximum allowable leverage of 200:1
(not 1000:1, as you stated).

And, for a position size of 50,000 units of USD/JPY, the dollar amount of that margin will be
250 USD (not 50 USD, as you stated).

1 Like
3

thanks!

that’s very fast.

4

So, if let’s say I go long but the market go against me by 50 pips and I want to hold my position, how much is my required margin? Is my required margin 20USD?

50 pips needs how many dollar of margin?
1 pips = 0.01 JPYUSD - 1 JPY = 0.009 USD - 1 pips = 0.09/10 JPY = 0.009 JPY or 0.00008 USD,
50 pips = 0.004 USD.
With leverage of 1:200, 50 pips = 0.8 USD.
Lot size = 0.05 x 100,000 = 50,000
0.8*50K = 4K
Margin required on 4K = 0.5% = 20USD.

5

Margin is not related in any way to pips. Margin is essentially a “good-faith deposit” which you are required to post, in order to enter a trade. Most brokers stipulate two margin percentages:
the initial margin percentage, and the maintenance margin percentage.

The 0.5% margin percentage you mentioned in your previous post was initial margin. In order for you to enter a USD/JPY trade with a notional value of $50,000, you must have at least $250 in free margin available in your account.

As soon as you enter this trade, the initial margin requirement will be replaced by the maintenance margin requirement. This maintenance margin is typically one-half of the initial margin. So, in the case of your previous example, after you have successfully entered your $50,000 USD/JPY trade, you will be required to maintain at least $125 in free margin in your account, in order to hold your position.

These margin amounts (initial and maintenance) are based on (1) the maximum allowable leverage offered to you by your broker, and (2) the size (notional value) of your position. These margin amounts have nothing to do with whether you are trading long or short, or whether your trade moves into profit or into loss.

I think you need to spend some serious study time in the Babypips School. All your newbie questions, including your questions about margin, will be answered there.

1 Like
6

To work out your margin required is actually very simple, you have 5 mini lots 50k. Your leverage is 200:1 (0.5%), the sum you need is 50,000 / 200 = $250 before you can place a trade with 50k.
Your pip value depends on your lot size in this case a mini lot is equivalent to $1 per pip, therefore with 50k your pip value is $5.