I can’t open a position, the terminal shows « Not enough money». How can I calculate the sum of free funds needed to open a position?
Note: For ease of calculating margin requirements we recommend to use the trader’s calculator. Below it is shown how to calculate margin requirements for the Forex market and for CFD on US Shares and Futures.
Before calculating margin requirement for opening a position it is necessary to take into account the type of the trading account on which the transaction is made.
On the accounts of the type alpari.micro the leverage is – 1:500.
On the accounts of the type alpari.classic the leverage is – 1:100.
Let’s consider the formula of margin calculation in the base currency:
Margin = Contract / Leverage,
where
Margin – is the collateral;
Base currency – the currency quoted first in the pair,
for example:
EURUSD – the base currency is EUR;
USDJPY – the base currency is USD;
GBPJPY – the base currency is GBP;
Contract – the contract size in the base currency. The size of 1 lot is always 100 000 units of the base currency. Consequently 0.1 lot = 100 000 * 0.1 = 10 000 in base currency, and 0.01 lot = 100 000 * 0.01 = 1 000 in base currency;
Leverage,
for example: leverage 1:500 – 500, 1:100 – 100.
After calculating margin in the base currency it is necessary to convert it into the deposit currency (at the rate of the position opening), i.e. USD, EUR.
Example 1. Calculation of margin on an account of the type alpari.classic with the deposit currency USD:
Trading instrument (Currency pair) – EURUSD;
Base currency – EUR ;
Lot = 0.1;
Contract = 10 000 EUR (100 000 * 0.1 lot);
Leverage = 1:100 (100);
The rate of EURUSD at the position opening = 1.3540;
Deposit currency – USD .
Calculation:
1. Margin = Contract / Leverage = 10 000 EUR / 100 = 100 EUR;
2. Then we convert it into the deposit currency (the USD). If the dollar in the currency pair under consideration is the first one then the pip value should be divided by the rate, otherwise it should be multiplied:
Margin= 100 EUR * 1.3540 = 135.40 USD.
Margin is equal to 135.40 USD.
Let’s consider how to calculate margin needed to open a position for CFD (US shares and Futures).
For CFD on US shares leverage is 1:10.
Let’s consider the formula of calculating margin for US shares:
Margin = (Contract * Price) / Leverage,
Where
Margin – is collateral;
Contract – the volume of contract. 1 lot is always 100 shares. Consequently 0.1 lot = 100 * 0.1 = 10 shares;
Price – the price of CFD at the position opening;
Leverage 1:10 – 10.
Example 2. Margin calculation on an account of the type alpari.classic with the deposit currency USD:
Trading instrument (CFD) – #GM (General Motors);
Lot = 0.1;
Contract = 10 shares (100 * 0.1 lot);
Leverage = 1:10 (10);
The rate #GM at the position opening = 31.03;
Deposit currency – USD.
Calculation:
Margin = (Contract * Price) / Leverage = (10 shares * 31.03) / 10 = 31.03 USD;
Margin is equal to 31.03 USD.
Margins for CFD on Futures are fixed, for the details refer to Contract Specification.
