How is the margin for a currency pair calculated?

The formula for calculating the margin of a currency pair is: lot size * contract size / leverage multiple, and the unit of currency depends on the base currency.

Taking EUR/USD as an example, the contract volume is 100,000 EUR and the leverage is 500 times, then the margin for 1 lot of EUR/USD is:

  • 1 * 100,000 / 500 = EUR 200

It is worth noting that since the calculation result of the margin is based on the base currency, which will be converted into USD quotations on the trading software, the margin will vary according to the exchange rate fluctuations between the base currency and the USD.

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Trading in financial instruments involves high risks due to the fluctuation in the value and prices of the underlying financial instruments. Due to the adverse and unpredictable market movements, large losses exceeding the investor’s initial investment could incur within a short period of time. The past performance of a financial instrument is not an indication of its future performance. Please make sure you read and fully understand the trading risks of the respective financial instrument before engaging in any transaction with us. You should seek independent professional advice if you do not understand the risks disclosed by us herein.

Trading in financial instruments involves high risks due to the fluctuation in the value and prices of the underlying financial instruments. Due to the adverse and unpredictable market movements, large losses exceeding the investor’s initial investment could incur within a short period of time. The past performance of a financial instrument is not an indication of its future performance. Please make sure you read and fully understand the trading risks of the respective financial instrument before engaging in any transaction with us. You should seek independent professional advice if you do not understand the risks disclosed by us herein.