- Trade Size: 0.5 standard lots (50,000 units of base currency)
- Contract Value: USD $100,000 per standard lot
- Leverage: 50:1
Margin = (0.5 * $100,000) / 50 = $1000
Considerations
- Forex Specific: This metric primarily applies to forex trading.
- Scaling: If a trader scales into a position (adds to it over time), the margin used would also increase.
- Risk Management: Margin is directly tied to risk. Higher leverage means lower margin requirements but increases potential losses.
