How is Indices Margin Level Calculated?
We shall first explain the various indices trading margin trading terms used in indices trading platforms & then explain how indices trading margin level is calculated using an example in MetaTrader 4.
Indices Margin, Margin Required, Equity, Used Stock Indices Trading Margin & Free margin
What is Margin Required? : It is amount of money your indices broker requires from you to open a position. It is expressed in percents.
What is Equity? : It is total amount of capital you've in your account.
What's Used Indices Trading Margin? : amount of money in your account which has already been used up when buying a indices lot, this contract is one that is displayed in open positions. As a trader you can't use this amount of money after opening a trade because you have already used it and it isn't available to you.
In other words, because your indices broker has opened up a position for you using the capital you have borrowed, you must maintain this usable margin for your trading account as a security to allow you to continue using this indices leverage he has given you.
What is Free Indices Margin? : amount in your account that you can use to open new trades. This is amount of money in your trading account which has not yet been indices trading leveraged because you have not yet opened a trade with this money - this is also very important for you as a trader because it enables you to continue holding your open trade transactions as explained and illustrated below.
Example of How is Indices Margin Level Calculated on MT4?
The indices margin examples on MetaTrader 4 indices Platform below, the set stock index leverage ratio is 100:1, the indices trading margin which is 1% is $2683.07, therefore the total amount controlled by the trader is: $268,307 - this is because with this leverage the trader has used little of his money & borrowed the rest, with this set at 100:1, trader is using 1% of their capital, this 1% equals to $2683.07, if 1% equals to $2683.07 then 100% is $268,307
How is Indices Margin Level Calculated?
Indices Margin - $2683.07
Indices Trading Margin used to open trades on MT4 example above
This indices trading Margin is 1% of the trade opened on MetaTrader 4 software
To Learn & Know More about Indices Leverage & Margin - How to Read the Topics Below:
Indices Leverage & Margin Explained
