In another article already discussed about Pip, Lot and Calculation of Profit / Loss. Now the article titled "Margin, Leverage and Margin Call (Part 2)" will discuss more about calculating Margin, Leverage and also the definition and calculation of Margin Call.
Margin and Leverage
With the margin and leverage then we have the possibility to save 10,000 euros as capital to be able to buy the 10,000 Euros, but enough to guarantee a capital of about 100 Euro only then are able to transact some 10,000 euros.
Example: For example, we will do the transaction in the currency pair USD / JPY as much as $ 10,000. In today's modern forex market, we no longer have the capital required as much as $ 10,000 to participate in the nominal amount of the forex transactions, but enough to ensure a capital of $ 100 only (with leverage 1:100).
Of course besides the guarantor of capital , we still have to provide a margin as available margin to hold our position when it is floating negative , so as not to force the cut loss by the system if the transaction turns out that we do experience a negative floating quite steep . So after open trade in execution ( close) then the margins will be returned to your account again as a whole .
The amount of leverage offered by each broker is varied between 1:100 to 1:1,000 , with the leverage it serves as leverage , which can increase the power of your transaction to about 100x as much of your capital capabilities ( for leverage 1:100 ) . So with a margin of $ 200 then you can trade a maximum in the amount of $ 200 x 100 = $ 20,000 .
Here's how to calculate the margin with leverage Example :
• 1:100 leverage means ( 1/100 ) x 100 % = 1 %
• the 1:200 leverage means ( 1/200 ) x 100 % = 0.5 %
• 1:500 the mean ( 1/500 ) x 100 % = 0.2 %
Margin Call
Margin call is a state where open positions in negative floating is no longer possible because the conditions for continued dwindling cash equity ( available margin consumables ) , so that it can no longer hold losses caused by transactions that we do so that the position will be closed automatically by the system . When we experience Margin Call , that means we run out of capital in the account and margin used in writing only . Margin Call can be regarded as the biggest failure for traders , therefore, to avoid the occurrence of Margin Call, we need to know our margin resilience before to open position and supported robust analysis .
Example calculation of a margin call
To find out how to calculate a margin call, the following illustration: Suppose our initial capital is $ 1,000 and has been doing open sell 0.2 lot on the GBP / USD with a leverage of 1:500, note the explanation above, then used margin is $ 76 (0.2 x 100,000 x 0.2 % x 1.9010 = $ 76). And the remaining capital balance of your (cash equity) after the cut by a margin collateral then, would be $ 1,000 - $ 76 = $ 924 Because we use 0.2 lot then, the value of movement per pip him to $ 2 and the remaining capital of $ 924 will be able to withstand the loss of up to $ 924 / $ 2 = 462 points. So if the loss exceeds prisoners (minus 462 points), will pass Margin Call.
Thus this article, hopefully you already know enough about the calculation of the margin, leverage and margin call. Thanks to Lee Wison who have given examples above calculation.
Margin and Leverage
With the margin and leverage then we have the possibility to save 10,000 euros as capital to be able to buy the 10,000 Euros, but enough to guarantee a capital of about 100 Euro only then are able to transact some 10,000 euros.
Example: For example, we will do the transaction in the currency pair USD / JPY as much as $ 10,000. In today's modern forex market, we no longer have the capital required as much as $ 10,000 to participate in the nominal amount of the forex transactions, but enough to ensure a capital of $ 100 only (with leverage 1:100).
Of course besides the guarantor of capital , we still have to provide a margin as available margin to hold our position when it is floating negative , so as not to force the cut loss by the system if the transaction turns out that we do experience a negative floating quite steep . So after open trade in execution ( close) then the margins will be returned to your account again as a whole .
The amount of leverage offered by each broker is varied between 1:100 to 1:1,000 , with the leverage it serves as leverage , which can increase the power of your transaction to about 100x as much of your capital capabilities ( for leverage 1:100 ) . So with a margin of $ 200 then you can trade a maximum in the amount of $ 200 x 100 = $ 20,000 .
Here's how to calculate the margin with leverage Example :
• 1:100 leverage means ( 1/100 ) x 100 % = 1 %
• the 1:200 leverage means ( 1/200 ) x 100 % = 0.5 %
• 1:500 the mean ( 1/500 ) x 100 % = 0.2 %
Margin Call
Margin call is a state where open positions in negative floating is no longer possible because the conditions for continued dwindling cash equity ( available margin consumables ) , so that it can no longer hold losses caused by transactions that we do so that the position will be closed automatically by the system . When we experience Margin Call , that means we run out of capital in the account and margin used in writing only . Margin Call can be regarded as the biggest failure for traders , therefore, to avoid the occurrence of Margin Call, we need to know our margin resilience before to open position and supported robust analysis .
Example calculation of a margin call
To find out how to calculate a margin call, the following illustration: Suppose our initial capital is $ 1,000 and has been doing open sell 0.2 lot on the GBP / USD with a leverage of 1:500, note the explanation above, then used margin is $ 76 (0.2 x 100,000 x 0.2 % x 1.9010 = $ 76). And the remaining capital balance of your (cash equity) after the cut by a margin collateral then, would be $ 1,000 - $ 76 = $ 924 Because we use 0.2 lot then, the value of movement per pip him to $ 2 and the remaining capital of $ 924 will be able to withstand the loss of up to $ 924 / $ 2 = 462 points. So if the loss exceeds prisoners (minus 462 points), will pass Margin Call.
Thus this article, hopefully you already know enough about the calculation of the margin, leverage and margin call. Thanks to Lee Wison who have given examples above calculation.
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