In Forex trading on MetaTrader, margin is calculated based on the leverage and the size of the open position, as well as the exchange rate of the currency pair you're trading.
Here are the key elements of the calculation:
1. Contract size (lot)
1 standard lot = 100,000 units of the base currency (the first currency in the pair).
1 mini lot = 10,000 units.
1 micro lot = 1,000 units.
2. Lot and base currency
If you are trading a pair like EUR/USD, the base currency is EUR. So, 1 lot represents 100,000 EUR.
3. Leverage
Leverage allows you to control a larger position with a smaller amount of margin. For example, with a 1:100 leverage, you can control an amount of 100,000 EUR with 1,000 EUR in margin.
4. Formula for margin calculation
Margin = (Contract size / Leverage) × Exchange rate of the currency pair.
Example:
Let's say you're trading 1 standard lot of EUR/USD, with an exchange rate of 1.2000 and a leverage of 100
Contract size: 100,000 EUR.
Leverage: 1:100.
EUR/USD exchange rate: 1.2000 (to convert the amount into USD).
Margin = (100,000 / 100) × 1.2000 = 1,200 USD.
In this case, you would need at least 1,200 USD in your account as available margin to open the position.