What is the margin?
The margin represents the number of funds you allocate from your account equity to open a position.
On leveraged positions, the margin is often expressed as a percentage of the position’s exposure to the market.
For example, a trade with an invested amount of $500 and a leverage of x5 has an exposure of $2,500. The margin is $500 or 20%.
How does the margin percentage calculation actually work?
This means that you stake a position for a currency pair, and neither the base nor the quote currency is the same as the currency used on your account. As a result, the margin requirement for these kinds of trades can be calculated in a currency that is different from what your own account deals with, which makes calculating margins a bit more difficult.
Let’s say that you decided to trade with GBP and JPY. The currency you use in your account is USD. Suppose that you then decide to take a position with 10,000 units of currency. This means that you are buying 10,000 GBP against an equivalent number of JPY. You are paying in JPY and buying in GBP, but in reality, you are buying JPY with USD. As far as your broker is concerned, your margin requirement will be calculated solely in USD, or your main account currency.
What is the formula for the margin percentage?
The formula is: MarginPercentage = (MT4_margin / MT4_equity * 100)
Even if margin stays constant, equity is still moving up and down, changing the margin %.