At Alpari, our margin requirements vary based on the denomination of your account (they're not just a fixed amount in USD). Let's look at an example to see how this works:
To calculate the margin required to open multiple positions, you'll first need to calculate the volume-weighted price (Pcp in the formula):
Formula: Pср = (Open Price 1 × Lot 1 + Open Price 2 × Lot 2 + ... + Open Price X × Lot X) / (Lot 1 + Lot 2 + ... + Lot X)
Next, we'll need to calculate the amount of margin required for the hedged trading volume:
Formula: M1 = (Pср × Lots х 100,000) / Leverage / 2
Now, we'll calculate the margin required for the unhedged trading volume:
Formula: M2 = (Pср × Lots х 100,000) / Leverage
Now, just add up the margin required for the hedged and unhedged trading volume:
Formula: Margin = M1 + M2
Example: In this example, we'll look at how to calculate the margin required to open multiple positions on currency pairs.
Three positions are opened:
For standard.mt4 accounts denominated in USD, the Leverage is 1:500
Calculation data for the three trades:
We'll start by calculating the volume-weighted price:
Pср = (1.70450 х 0.5 + 1.70200 х 0.8 + 1.70610 х 1.4) / (0.5 + 0.8 + 1.4) = 1.70459 GBPUSD
Next, we'll calculate the margin for the hedged volume. Here, there are 1.6 lots of hedged volume (0.8 × 2 = 1.6 lots)
М1 = (1.70459 х 1.6 х 100,000) / 500 / 2 = 272.7344 USD
Now, we'll calculate the margin for the remaining (unhedged) volume.
М2 = ((2.7-1.6) x 1.70459 х 100,000) / 500 = 375.0098 USD
Finally, we'll calculate the total margin required.
Margin = 272.7344 + 375.0098 = 647.7442 USD