Margin is the amount of money reserved to keep an order open; it is calculated in the trading account currency. How much margin is required is calculated based on the trading instrument and leverage set on your trading account. This article describes all you need to know about margin and the different margin requirements.
Calculating how much margin is required for an order can ensure you have sufficient funds in your trading account to open an order.
Exness also provides the investment calculator; which can help you calculate the margin requirements for any trading instrument (including with leverage) within seconds. Learn how to use the investment calculator.
Read more about the difference between margin and free margin.
- Calculating margin
- Dynamic margin requirements
- Fixed margin requirements
- Higher margin requirements
When calculating margin, it is first useful to ask whether leverage is used or not.
For margin calculations with leverage:
Margin = lots x contract size / leverage size
Let’s take 2 lots of EURUSD, with a leverage of 1:2000.
- Lots: 2
- Contract size: EUR 100 000
- Leverage size: 2 000
Margin = 2 x 100000 / 2000 = EUR 100
For margin calculations without leverage:
Margin = lots x contract size x required margin
Let’s take 0.5 lots of GBPSEKm.
- Lots: 0.5
- Contract size: GBP 100 000
- Required margin: In this example, the required margin is 1%.
Margin = 0.5 x 100000 x 0.01 = GBP 500
Note: You can find the required margins in our contract specifications.
Margin requirements for hedged orders:
0% margin is required for completely hedged orders for trading instruments in the following groups:
Let us look at two examples here:
Example 1 - Margin calculation for fully hedged positions:
The following orders make up a hedged order with the leverage set at 1:2000:
- 5 lots EURUSD Buy
- 5 lots EURUSD Sell
The margin charged in the above case will be 0 as both orders were opened at the same time, at the same trading volume, with the same instrument.
Note: If the instrument or instrument suffix does not match, the order is not considered a hedged order, and margin will be charged. Read more about why margin is being held on your hedged order.
Example 2 - Margin calculation for partially hedged positions:
The following orders make up a partially hedged order with the leverage set at 1:2000:
- 5 lots EURUSD Buy
- 3 lots EURUSD Sell
Here 3 lots of EURUSD buy order are considered hedged, while the remaining 2 lots are unhedged’ margin will only be charged for the unhedged portion.
Margin charged = (Lots x contract size) / leverage
= (2 x 100000)/2000
= 100 EUR
Dynamic margin requirements
Most trading instruments have dynamic margin requirements, meaning the margin required changes as leverage changes. The higher the leverage, the less margin is required, and vice versa.
For instruments with dynamic margin requirements, leverage automatically changes:
- When your trading account’s equity changes.
- During the publication of important economic news.
- 3 hours before and 1 hour after weekend market closure and holiday breaks.
Fixed margin requirements
Some trading instruments present fixed margin requirements, meaning regardless of leverage set, margin required to open the order remains the same.
These financial instruments include the following groups:
- Exotic (currency pairs)
- Commodities (Energies)
- XPD (currency pairs)
- XPT (currency pairs)
The margin held for these instruments will depend on the instrument and is not affected by the leverage set (including unlimited leverage). These instruments are also always subject to higher margin requirement rules.
Higher margin requirements (HMR)
Higher amounts of margin are required to open an order during key events and specific time periods which impact the general volatility of the market; these periods are known as HMR (higher margin requirements) periods.
In most cases, the maximum leverage available for new orders opened during this time is set to 1:200 automatically. An email notification is sent to the trading platform’s Mailbox should this impact your trading account and includes a list of affected instruments and the HMR duration.
To keep track of high-importance news, you can also refer to our economic calendar.
The HMR period can be extended based on risk management decisions depending on the impact of the news.
How do HMR periods affect dynamic margin requirements?
HMR results in a maximum leverage of 1:200. This is applied to new orders or orders reopened as a result of other closed positions during:
- News releases
- Weekends and public holidays
Orders opened 15 minutes before and 5 minutes after the news release will have HMR applied (max 1:200 leverage).
This mitigates the trader’s exposure to the risk of price instability during economic events. 5 minutes after the news release, HMR is lifted and margin requirements are recalculated based on the equity of the trading account and its leverage.
Weekends and public holidays
Forex and metal trading instruments are subject to trading breaks during the weekend and public holidays. HMR (max 1:200 leverage) is applied to these instruments in the 3 hours before the market closes, and for 1 hour after the market reopens.
How do HMR periods affect fixed margin requirements?
- For Stocks:
- HMR of 20% (max 1:5 leverage) applies to a specific stock 6 trading hours before and lasts 20 minutes after the publishing of its company financial report. Refer to the stock announcement dates to prepare for the HMR period.
- HMR of 20% (max 1:5 leverage) is also applicable to stocks 15 minutes before market closing time up until 20 minutes after the market reopens.
- For Commodities:
- UK Oil and US Oil have an HMR of 5% (max 1:20 leverage) during high-importance news and weekend breaks.
- UKOIL starts from 08:00 GMT+0 on Friday to 00:30 GMT+0 on Monday.
- USOIL starts from 16:45 GMT+0 on Friday to 22:59 GMT+0 on Sunday.
- XNGUSD has a fixed margin rate (FMR) of 5%. During HMR, leverage will be limited to 2% (max 1:5 leverage).
- Orders placed on Gold within 30 minutes of the daily break, economic news, weekends, and holidays are subject to HMR, with leverage restricted to 1:1000 or less.
- Indices are subject to HMR every day which varies for each index.
Note: BTCUSD and BTC pairs will have fixed margin requirements during the HMR.