Published on: 2023-05-31
Updated on: 2024-04-02
Used margin refers to the amount of margin already used during trading. That is to say, when opening or adding positions, a portion of the margin will be frozen as a risk reserve, which belongs to the used margin. The used margin corresponds to the available margin, which is the remaining margin in the account that can be used for new or additional positions in addition to the frozen portion.
The size of the used margin depends on the selected leverage ratio and trading volume. The larger the trading volume and the higher the leverage ratio, the more margin is required, so the used margin will also increase accordingly. When conducting transactions, it is necessary to pay attention to controlling the size of the used margin to avoid account breaches or insufficient funds.
The calculation formula for the used margin is as follows:
Used margin=trading volume, opening price, and leverage ratio.
Among them, the trading volume refers to the number of contracts or trading hands selected, the opening price refers to the current market price of the trading variety, and the leverage ratio refers to the leverage ratio set by the Trading Account.
For example, suppose that the leverage multiple of a trading account is 100 times, and you want to open a standard gold contract at the current market price of 1800 dollars per ounce. So, according to the above formula, the used margin for this transaction is:
Used deposit = 1 hand = 1800 USD 100 = 180 USD
Therefore, when conducting transactions, it is necessary to pay attention to the size of the margin used to avoid situations such as account breaches or insufficient funds.
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Risk Warning: Trading Contracts for Difference (CFDs) are complex financial instruments and come with a high risk of losing money rapidly due to leverage. Trade on margin carries a high level of risk and may not be suitable for all investors. Before deciding to trade Forex and CFDs, you should carefully consider your trading objectives, level of experience and risk appetite. The possibility exists that you could sustain a loss of some or all of your initial trading capital. We recommend that you seek independent advice and ensure you fully understand the risks involved before making any investment decision. Please read the relevant risk disclosure statements carefully before trading.
