Margin is a cash guarantee required to maintain all opened positions. This formula helps to calculate the required margin: trade volume (number of lots) * contract size / leverage.
When trading CFD, the margin for one trade may differ in relation to the current situation.
There are 3 types of margins: initial margin, maintenance margin, and overnight margin.
Initial margin is the amount of equity required to open the trade on the market.
Maintenance margin is the amount of equity necessary to support the trade.
Overnight margin is the amount of equity required to transfer the trade overnight.
All values are in the specifications of the instruments where you can find the margin size for a deal with trade volume 1 lot.
Example:
Let’s calculate the size of margin necessary for the deal of 0,5 lot with the instrument EUR/USD with 1:100 leverage.
0.5 * 100 000 / 100 = 500
In that way, we see that the margin will amount to $500.