Margin Jargon.

Let’s learn more margin jargon.

Margin Requirement (Per Position)

DEFINITION:

Margin Requirement is the amount of margin required to open a position.

They expressed it as a percentage (%) of the “full position” size or “Notional Value” of the position you wish to open.

Required Margin (Per Position)

DEFINITION:

Required Margin is the money that is set aside and “locked up” when you open a trade.

For example, if you open a $10,000 (mini lot) position, with a Required Margin of 2% (or 50:1 leverage), $200 will be “locked up” during the duration of the trade.

This $200 can’t be used to open other positions as long as the trade is open. Once you close the trade, the $200 margin will be “released”.

REQUIRED MARGIN IS ALSO CALLED:

• Entry Margin
• Initial Margin
• Initial Entry Margin
• Maintenance Margin Required (MMR)

HOW TO CALCULATE (PER POSITION):

If the base currency is the SAME as your account’s currency,

Required Margin = Notional Value x Margin Requirement

If the base currency differs from your account’s currency:

Required Margin = Notional Value x Margin Requirement x Exchange Rate Between Base Currency and Account Current

Used Margin

DEFINITION:

Used Margin is the minimum amount of Equity that must be maintained in a margin account.

This is the total amount of margin currently in use to maintain open positions.

USED MARGIN IS ALSO CALLED:

• Margin Used
• Maintenance Margin Required (MMR)
• “Total Margin”

HOW TO CALCULATE:

Used Margin is simply the Required Margin for ALL open positions.

Used Margin = Total Required Margin for ALL Open Positions

Equity

DEFINITION:

Equity is your account balance plus the floating profit (or loss) of all your open positions.

Represents the “real-time” value of your account.

EQUITY IS ALSO CALLED:

• Account Equity
• Net Asset Value
• Net Equity

HOW TO CALCULATE:

If you have open positions:

Equity = Balance + Floating Profit (or Loss)

If you do not have any open positions:

Equity = Balance

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