Margin Call - are my calculations correct?

Beringin

Trader
Jul 19, 2018
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0
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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?

Scenario 1: 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?
 

Enivid

Administrator
Staff member
Nov 30, 2008
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Odesa
www.earnforex.com
Sorry, but all your calculations seem to be completely wrong.

First, let's get the initial conditions straight:
If your margin required is 0.5% for USD/JPY, then that's not 1:1000 leverage. That's 1:200 leverage.
The standard lot size on USD/JPY is 100,000. You can open a position of this size at 1:200 leverage with $500 in your account.
A 50,000 position would require $250.

The amount of margin you are required to hold to keep the paper loss from triggering a margin call or stop-out depends not only on the size of your position and your margin levels, but also on the broker's margin call and stop-out levels. There is no point in discussing this without knowing those levels.