How to Calculate Margin Requirements

If you are trading nano lots and have 1 nano lot open on the EURUSD and 3 nano lots open on the USDJPY, how would you calculate the margin requirement using 1:100 leverage.

Remember a nano lot has a contract size of 100 units of the base currency (the first currency listed in the pairs name).

Here is how I calculate the margin requirement:

If EURUSD is presently trading at 1.416 then the margin requirement to place a
1 nano lot trade of EURUSD at 1.416 is $1.41.

Required Margin for EURUSD = 100 units x 1.41 x 0.01 = $1.41 USD.

For pairs beginning with USD (USD/CAD, USD/CHF, USD/JPY, etc.):
Contract size (in the base currency)/leverage = margin required (in the base currency)

100 USD/100 [1:100 leverage]=$1.00 USD to place a 1 nano lot trade
Required Margin for USDJPY = 300 units x 1.00 x 0.01 = $3.00 USD.
(or 300/100= $3.00)

So $1.41 + $3.00 = $4.41 is the total margin requirement for the
4 positions you would have open.

You can read more info about margin requirements here at these two sites:

http://thismatter.com/money/forex/leverage-margin-pips.htm
http://forexmagnates.com/calculating-margin-by-interbank-fx/

Hope this has helped you.

For more information on automated trading, please visit http://WealthSecrets.com

Take care and I hope to collaborate with you in the future.

Mike