Definition
The amount of capital required to open and maintain a forex trade, determined by the leverage used and the size of the position.
Formula
Margin = (Trade Size in Lots * Contract Value) / Leverage
- Trade Size in Lots: The number of standard lots (or mini, micro, etc.) traded.
- Contract Value: The standard value per lot in the traded currency pair (e.g., 100,000 units for standard lots in major pairs).
- Leverage: The ratio of borrowed funds to your own capital (e.g., 100:1 leverage).
