Hello everyone!!! I’m really new into Forex trading and have many doubts that i hope I can clear in this forum. The first one is relate to margin, I guess I get the concept, but how do I calculate the margin for an specific pair? I appreciate your help.
Happy tradings :D:D:D
Margin is not pair specific - at least not for the major currencies and crosses, anyway. It will be the value of your position divided by your broker’s permissible leverage. So for example, if you are long 100,000 USD/JPY then your position value is $100,000. If your broker offers 100:1 leverage, then the margin would be $100,00/100 = $1000.
Got it thank you! Another question, so margin call is when you reach the margin and the position is automatically closed, right?
Excellent, Thank you!!! :D:D:D
Forget the broker leverage. It is overweight in most lessons. It is just a maximal leverage, not the leverage you set up for a trade. Don’t play it to the max leverage, but the more broker leverage you have, the more playroom you have until the margin call. So: brokers with more leverage is a win. Just the opposite to real leverage:
The real affecting leverage is your account size (equity) divided by lot size. Take this number as big as possible! Again you have more playroom until margin calls.
Check it with demo account first, how that affects your trades, how the different margins and equity comes into account. I guess you can read a whole book and will anyways start to real understand it only after a demo trading.
Have always enough buffer money that you do not run into margin calls. A margin call is a nice one for every broker and a hell for every trader.