{"id":9456,"date":"2022-10-11T06:33:52","date_gmt":"2022-10-11T06:33:52","guid":{"rendered":"https:\/\/mdr.foobrdigital.com\/?p=9456"},"modified":"2022-10-11T06:33:52","modified_gmt":"2022-10-11T06:33:52","slug":"what-is-used-margin","status":"publish","type":"post","link":"https:\/\/mudassirbackup.infinitycodestudio.com\/index.php\/2022\/10\/11\/what-is-used-margin\/","title":{"rendered":"What is Used Margin?"},"content":{"rendered":"\n

What does \u201cUsed Margin<\/strong>\u201d mean?<\/p>\n\n\n\n

In order to understand what Used Margin is, we must first understand what Required Margin<\/strong> is.<\/p>\n\n\n\n

Whenever you open a new position, a specific amount of Required Margin<\/strong> is set aside.<\/p>\n\n\n\n

Required Margin was discussed in detail in the previous lesson, so if you don\u2019t know what it is, please read our\u00a0What is Margin?\u00a0lesson first.<\/p>\n\n\n\n

If you open more than one position at a time, each specific position will have its own Required Margin<\/strong>.<\/p>\n\n\n\n

\"Required<\/figure>\n\n\n\n

If you add up all of the Required Margin of all the positions that are open, the total amount is what\u2019s called the Used Margin.<\/strong><\/p>\n\n\n\n

\"Used<\/figure>\n\n\n\n

Used Margin<\/strong> is all the margin that\u2019s \u201clocked up\u201d and can\u2019t be used to open new positions.<\/p>\n\n\n\n

This is margin is already being \u201cused\u201d. Hence the name, Used Margin<\/strong>.<\/p>\n\n\n\n

While Required Margin is tied to a SPECIFIC trade, Used Margin refers to the amount of money you needed to deposit to keep ALL your trades open<\/strong>.<\/p>\n\n\n\n

Example: Open a long USD\/JPY and USD\/CHF position<\/h2>\n\n\n\n

Let\u2019s say you\u2019ve deposited $1,000 in your account and want to open TWO positions:<\/p>\n\n\n\n

  1. Long USD\/JPY<\/strong> and want to open 1 mini lot (10,000 units) position.<\/li>
  2. Long USD\/CHF<\/strong> and want to open 1 mini lot (10,000 units) position.<\/li><\/ol>\n\n\n\n

    The Margin Requirement for each\u00a0currency pair\u00a0is as follows:<\/p>\n\n\n\n

    Currency Pair<\/strong><\/td>Margin Requirement<\/strong><\/td><\/tr>
    USD\/JPY<\/td>4%<\/td><\/tr>
    USD\/CHF<\/td>3%<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n

    How much margin (\u201cRequired Margin\u201d) will you need to open each position?<\/p>\n\n\n\n

    Since USD is the base currency for both\u00a0currency pairs. a mini lot is 10,000 dollars, which means EACH position\u2019s notional value is\u00a0$10,000<\/strong>.<\/p>\n\n\n\n

    Let\u2019s now calculate the Required Margin for EACH position.<\/p>\n\n\n\n

    USD\/JPY Position<\/h3>\n\n\n\n

    The Margin Requirement for USD\/JPY is 4%<\/strong>. Assuming your trading account is denominated in USD, the Required Margin will be $400<\/strong>.<\/p>\n\n\n\n

    Required Margin = Notional Value x Margin Requirement\n\n$400 = $10,000 x 0.04<\/pre>\n\n\n\n
    USD\/CHF Position<\/h3>\n\n\n\n
    The Margin Requirement for USD\/CHF is 3%<\/strong>.<\/p>\n\n\n\n
    Assuming your trading account is denominated in USD, the Required Margin will be $300<\/strong>.<\/p>\n\n\n\n
    Required Margin = Notional Value x Margin Requirement\n\n$300 = $10,000 x 0.03<\/pre>\n\n\n\n
    Since you have TWO trades, the Used Margin in your trading account will be $700.<\/strong><\/p>\n\n\n\n
    Used Margin = Sum of Required Margin from ALL open positions\n\n$700 = $400 (USD\/JPY) + $300 (USD\/CHF)<\/pre>\n\n\n\n
    Here\u2019s a cool diagram of how Used Margin relates to Required Margin and Balance.<\/a><\/p>\n\n\n\n
    Recap<\/h2>\n\n\n\n
    In this lesson, we learned about the following:<\/p>\n\n\n\n
    • Used Margin<\/strong>\u00a0is the TOTAL amount of margin currently in use to maintain\u00a0all<\/em>\u00a0open positions.<\/li>
    • Said differently, it is the\u00a0SUM of all\u00a0Required Margin<\/strong>\u00a0being used.<\/li><\/ul>\n\n\n\n
      In previous lessons, we learned:<\/p>\n\n\n\n
      • What is Margin Trading?\u00a0Learn why it\u2019s important to understand how your margin account works.<\/li>
      • What is Balance?\u00a0Your account balance is the cash you have available in your trading account.<\/li>
      • What is Unrealized and Realized P\/L?\u00a0Know how profit or losses affect your account balance.<\/li>
      • What is Margin?\u00a0Required Margin is the amount of money that is set aside and \u201clocked up\u201d when you open a position.<\/li><\/ul>\n","protected":false},"excerpt":{"rendered":"
        What does \u201cUsed Margin\u201d mean? In order to understand what Used Margin is, we must first understand what Required Margin is. Whenever you open a new position, a specific amount of Required Margin is set aside. Required Margin was discussed in detail in the previous lesson, so if you don\u2019t know what it is, please read our\u00a0What is Margin?\u00a0lesson […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[896],"tags":[],"_links":{"self":[{"href":"https:\/\/mudassirbackup.infinitycodestudio.com\/index.php\/wp-json\/wp\/v2\/posts\/9456"}],"collection":[{"href":"https:\/\/mudassirbackup.infinitycodestudio.com\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/mudassirbackup.infinitycodestudio.com\/index.php\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/mudassirbackup.infinitycodestudio.com\/index.php\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/mudassirbackup.infinitycodestudio.com\/index.php\/wp-json\/wp\/v2\/comments?post=9456"}],"version-history":[{"count":0,"href":"https:\/\/mudassirbackup.infinitycodestudio.com\/index.php\/wp-json\/wp\/v2\/posts\/9456\/revisions"}],"wp:attachment":[{"href":"https:\/\/mudassirbackup.infinitycodestudio.com\/index.php\/wp-json\/wp\/v2\/media?parent=9456"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/mudassirbackup.infinitycodestudio.com\/index.php\/wp-json\/wp\/v2\/categories?post=9456"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/mudassirbackup.infinitycodestudio.com\/index.php\/wp-json\/wp\/v2\/tags?post=9456"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}