How do you calculate margin with floating leverage based on the total notional value of open positions?

Let’s take a look at how this works:

  1. First we’ll open Position #1: Buy 5 lots of GBPUSD at 1.27422.
  • The notional value of this position is 637,110 USD (5 × 100,000 × 1.27422 = 637,110). Since the notional value is less than 700,000 USD, 1:1,000 leverage will be applied.
  • Required Margin: 637,100 / 1,000 = 637,11 USD
  1. Next we’ll open Position #2: Buy 15 lots of EURUSD at 1.11479.

The notional value of this position is 1,672,185 USD (15 × 100,000 × 1.11479 = 1,672,185).

Total Notional Value of Positions #1 and #2:

  • 637,110 (for Position #1) + 1,672,185 (for Position #2) = 2,309,295 USD
  • The total notional value of these positions is greater than 2,000,000 USD, but less than 7,000,000 USD. 1:1,000 leverage will be applied to the first 700,000 USD; 1:500 leverage to the next 1,300,00 USD; 1:200 leverage to the remainder.
  • Required Margin: 700,000 / 1,000 + 1,300,00 / 500 + 309,295 / 200 = 4,846.48 USD
  1. Next we’ll open Position #3: Buy 40 lots of GBPUSD at 1.27440.

The notional value of this position is 5,097,600 USD (40 × 100,000 × 1.27440 = 5,097,600).

Total Notional Value of Positions #1, #2 and #3:

  • 637,110 (for Position #1) + 1,672,185 (for Position #2) + 5,097,600 (for Position #3) = 7,406,895 USD
  • The total notional value of these positions is now greater than 7,000,000 USD, but less than 15,000,000 USD. 1:1,000 leverage will be applied to the first 700,000USD; 1:500 leverage to the next 1,300,000 USD; 1:200 leverage to the next 5,000,000 USD; 1:100 to the remainder.
  • Required Margin: 700,000 / 1,000 + 1,300,000 / 500 + 5,000,000 / 200 + 406,895 / 100 = 32,368.95 USD
  1. Next we’ll open Position #4: Buy 70 lots of EURUSD at 1.11514.

The notional value of this position is 7,805,980 USD (70 × 100,000 × 1.11514 = 7,805,980).

Total Notional Value of Positions #1, #2, #3 and #4:

  • 637,110 (for Position #1) + 1,672,185 (for Position #2) + 5,097,600 (for Position #3) + 7,805,980 (for Position #4) = 15,212,875 USD
  • The total notional value of these positions is now greater than 15,000,000 USD. 1:1,000 leverage will be applied to the first 700,000USD; 1:500 leverage to the next 1,300,000 USD; 1:200 leverage to the next 5,000,000 USD; 1:100 leverage to the next 8,000,000 USD; 1:25 leverage to the remainder.
  • Required Margin: 700,000 / 1,000 + 1,300,000 / 500 + 5,000,000 / 200 + 8,000,000 / 100 + 212,875 / 25 = 116,815 USD
  1. Next we’ll close Position #2: Buy 15 lots of EURUSD at 1.11479.

The notional value of this position is 1,672,185 USD.

Total Notional Value of the Remaining Positions (#1, #3, and #4):

  • 637,110 (for Position #1) + 5,097,600 (for Position #3) + 7,805,980 (for Position #4) = 13,540,690 USD
  • After Position #2 is closed, the notional value of the remaining open positions drops to 13,540,690 USD. Since the notional value is now less than 15,000,000 USD, 1:25 leverage will no longer be applied. With the drop in notional value, the amount of margin required will be lower as well.
  • Required Margin: 700,000 / 1,000 + 1,300,000 / 500 + 5,000,000 / 200 + 6,540,690 / 100 = 93,706.90 USD

Attention:

The notional value ranges at which different levels of leverage are applied vary by instrument group (FX Majors, FX Minors, FX Exotics, FX RUB, Spot Metals, and FX Special). Individual requirements may also be applied to particular instruments. The notional value of open positions on your account is calculated separately for each group of trading instruments. Opening or closing a position on an instrument in one group will have no effect on the amount of leverage applied to positions in other instrument groups. You can learn more about the leverage offered for different instrument groups on our "Margin Requirements" page.

If positions are opened, closed, or modified, or if there are any non-trading operations on standard.mt4, standard.mt5, pamm.standard.mt4, or pamm.standard.mt5 accounts in the hour before the trading session closes on Friday, the leverage on all open and new positions on currency pairs and metals will be set at 1:100 for the remainder of the session (except for positions to which 1:1-1:100 leverage is applied). Before the next trading session opens, the leverage on these positions will be reset based on trading volume, or set by you in myAlpari.

A fixed leverage of 1: 500 is set for nano.mt4 accounts, which may vary if positions are opened, closed, or modified, or if there are any non-trading operations in the hour before the trading session closes on Friday, in which case the leverage on all open and new positions on currency pairs and metals will be set at 1:100 for the remainder of the session (except for positions to which 1:1-1:100 leverage is applied).

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