What is Free Margin? | FXTM Learn Forex in 60 Seconds
Articles

What is Free Margin? | FXTM Learn Forex in 60 Seconds


Free Margin, in its simplest definition, is the money in your trading account that is available for trading. It is calculated by using this basic formula: Remember that Equity is the Balance, plus or minus any profit or loss from open positions. Let’s take a look at this example. Say that someone enters a trade with the following conditions: Decides to buy 2 lots of EURUSD at the exchange rate of 1.20000. So, the transaction will amount to 240 000 US Dollars. The required margin for this position is calculated as follows: 240 000 divided by 50. If after entering this trade, the price of EURUSD fell to 1.19050, he incurred a loss of 0.00950 pips. Which is equivalent to: In this case, the trader’s Free Margin would be: In the next video I will tell you all about Margin Level. Stay tuned!

Leave a Reply

Your email address will not be published. Required fields are marked *