Forex deposit

When trading Forex, there are several important factors that characterize a currency transaction. One of the most important is Forex collateral, which is the trader's own funds.

Forex collateral is the margin required to open a trade, i.e., the amount required in a trader's account to open a new trade, taking into account leverage. The "Free Margins" indicator in the trader's trading terminal is used for calculations.

This indicator serves as the primary benchmark for determining the volume of open orders on Forex; it can vary depending on the currency pair being traded. Therefore, when calculating margin, consider not only the planned volumes but also the base currency in the currency pair.

Forex margin calculation.

Several methods are used to calculate the margin amount depending on the currency pair type.

1. Base - if the base currency in the currency pair is the US dollar, then the calculation uses two indicators: transaction volume and leverage.

For example , to open a 1-lot trade on the USD/CHF currency pair using leverage , we would need 1,000 US dollars. Decreasing leverage will correspondingly increase the required collateral amount on Forex.

2. Quoted - if the dollar is the quote currency in the currency pair, the calculation should be based on the current quote rate.

For example , to open a 1-lot trade on the GBP/USD currency pair with a current exchange rate of 1.5200, the required amount is 152,000 US dollars.

The reason is that the collateral amount is calculated based on the trade volume, which, although always equal to 100,000 units of the base currency, always varies due to exchange rate differences. After all, you can't compare the value of 100,000 pounds sterling with 100,000 Japanese yen.

3. Cross currencies - when it comes to cross currencies, we focus on the base currency's exchange rate against the US dollar.

For example , the forex margin for EUR/GBP is calculated based on the euro's exchange rate against the dollar. If the exchange rate is $1.3545 per euro, then opening a one-lot trade with 1:100 leverage requires $1,355.50.

Sometimes, in the trader's trading terminal, you may find that the margin amount does not match the calculated amount. This is because some brokers use a smaller portion of the required funds as forex margin after opening an order, freeing them up for opening new orders.