# How to Calculate Margin in Indices Trading

When indices trading if you have \$1,000 and use option 100:1 and buy 1 standard lot for \$100,000 your margin on this indices trading transaction is the \$1000 dollars in your stock indexes trading account, this margin is the money that you will lose is your open transaction goes against you the other \$99,000 that is borrowed, they will close the open indices trading transactions automatically once your \$1,000 has been taken by the stock indexes trading market.

If they set 100% requirement of this level before closing your open positions automatically, then your indices trade will be closed once your balance gets to \$1,000: Meaning the trade will close out as soon as you execute it because even if you pay 1 pip spread your account balance will get to \$990 and the needed percentage is 100% i.e. 1,000 dollars, therefore your orders will immediately get closed.

Most indices brokers do not set 100% requirement, but there are those that set 100% or 50% are not suitable for you at all, choose those set 20% margin requirements, in fact, those that set at 20% are some of the best because the likely hood they close out your open indices trade is reduced as shown in the examples below.

For Example if - for a indices broker requiring 20% margin requirement

Using 100:1 leverage

If stock indices leverage is 100:1 and you transact 1 Mini Lot, equal to \$10,000

\$10,000 dollars(mini lot) divide by 100:1, your used capital is \$100

Calculation:

= Capital Used * Percentage(100)

= \$1,000/\$100 * Percentage(100)

Indices Trading Margin Requirement = 1,000 %

Investor has 980% above the indices trading margin required amount

Using 10:1

If stock indices leverage is 10:1 and you transact 1 Mini Lot, equal to \$10,000

\$10,000 dollars(mini lot) divide by 10:1, your used capital is \$1000

Calculation:

= Capital Used * Percentage(100)

= \$1,000/\$1000 * Percentage(100)

Indices Trading Margin Requirement = 100 %

Investor has 80% above the indices trading margin required amount

The margin trading example explained and illustrated below, the set stock indices leverage is 100:1, the indices trading margin which is 1% is \$2683.07, therefore the total amount controlled by the indices trader is: \$268,307 - this is because with this indices trading leverage the indices trader has used little of his money and borrowed the rest, with this set at 100:1, the indices trader is using 1 % of their capital, this 1% is \$2683.07, if 1% is \$2683.07 then 100% is \$268,307 How to Calculate Margin in Indices Trading - How to Calculate Indices Trading Margin Requirement in Indices     