How can we calculate the margin requirements?

<p id="isPasted">Margin = (Notational volume * Current Trading Value of currency) / Leverage.</p><p>Where Notational volume is the number of lots multiplied by 100,000 units.</p><p>Example:</p><ul><li><p>BlackBull Markets offers leverage of 1:500</p></li><li><p>Assume a balance of $1,000</p></li><li><p>And you were trading the EURUSD, which is currently trading at the 1.11890 mark.</p></li><li><p>And you were trading 3 lots.</p></li></ul><p><strong>If we were to enter these quantities into our Margin Formula:</strong></p><p>= ((3*100,000) x 1.11890) / 500</p><p>= (300,000 x 1.11890) / 500</p><p>= 335670 / 500</p><p>= 671.34 =&nbsp;<strong>Margin</strong></p><p>This formula indicates that the higher your leverage, the smaller your margin requirement will be.</p><p><strong>Free Margin Formula: </strong>Equity – Margin = Free Margin</p><p><strong>Example:</strong> 1,000 – 671.34 = 328.66</p><p><strong>Margin Percentage Formula: </strong>&nbsp;(Equity / Margin) x 100 = Margin %</p><p><strong>Example:</strong> (1,000 / 671.34) x 100 = 148.96%</p><p>Once your account reaches a Margin percentage below 75%, you will receive a margin call.</p><p>Below 50% you will be stopped out / liquidated. This means all your open positions will automatically be closed.</p><p>To prevent a stop more funds will be required, or open positions must be closed.</p><p>With our example, we can see that a margin call would have been received by this point and our account is nearing a stopout.</p><p>All these calculations are provided on the MT4 platform. However, a successful trader needs to understand how these figures are derived and what they represent.</p><p>If further explanation is required, trading guide videos are available on our YouTube channel or feel free to contact our support team via live chat.</p>

<p id="isPasted">Margin requirements are calculated differently depending on the asset class being traded (stocks, futures, or forex) and are set by exchanges and brokerage firms. The basic principle involves using leverage to determine the minimum amount of capital required to open a position.&nbsp;</p><p><strong>For stock trading</strong></p><p>For stocks, the calculation involves the total value of the trade and the required margin percentage.&nbsp;</p><ul><li>Formula: Margin Requirement = (Total Trade Value) x (Margin Requirement Percentage)</li><li>Example: If you buy 100 shares of a stock at ₹500 per share and the initial margin requirement is 20%, you would need to deposit ₹10,000 to cover a total position of ₹50,000.</li><li>Total Trade Value = 100 shares x ₹500 = ₹50,000</li><li>Margin Requirement = ₹50,000 x 20% = ₹10,000 </li></ul><p><strong>For forex trading</strong></p><p>In forex, the margin is calculated based on the notional volume, current trading value, and the leverage provided by the broker.&nbsp;</p><ul><li>Formula: Margin = (Notional Volume x Current Trading Value) / Leverage</li><li>Example: To calculate the margin for one standard lot (100,000 units) of EUR/USD with a leverage of 1:30 and a current price of 1.0850:</li><li>Margin = (100,000 x 1.0850) / 30 = $3,616.67</li><li>Free Margin: This is your equity minus the margin currently used for open positions. </li></ul><p><strong>For futures trading</strong></p><p>Futures margin requirements are typically set by the exchange and are based on sophisticated risk models like SPAN (Standard Portfolio Analysis of Risk), which considers multiple market scenarios.&nbsp;</p><ul><li>Initial Margin: The upfront amount required to open a futures position.</li><li>Maintenance Margin: The minimum amount that must be kept in the account to maintain the position.</li><li>Example: If the initial margin for a gold futures contract is $1,000 and the maintenance margin is $750, a margin call will be issued if your account equity falls below $750. </li></ul>