Margin Call - are my calculations correct?

Beringin

Trader
Jul 19, 2018
1
0
6
43
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
18,535
1,355
144
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.