Calculating CFDs Margin on MetaTrader 4 Explained

Examples of How to Calculate Margin on MetaTrader 4

If cfd leverage = 100:1

1,000 / 100,000 * 100= 1%

Margin required = 1%

(1/100 *100= 1%)

'Trade Forex Trading - Please simplify because I am Beginner'

(Simplify - your cfd capital is $1,000 after cfd leverage you control $100,000 - $1,000 is what percent of $100,000 - it is 1%) that is your cfd margin requirement for your cfd trading account.

The cfd margin examples in MetaTrader 4 cfd Platform below, the set cfds trading leverage ratio is 100:1, the cfd margin which is 1% is $2683.07, therefore the total amount controlled by cfd trader is: $268,307 - this is because with this leverage the trader has used little of his money & borrowed the rest, with this set at 100:1, the trader is using 1 % of their trading capital, this 1% is equivalent to $2683.07, if 1% is equal to $2683.07 then 100% is $268,307

Calculating CFDs Margin on MetaTrader 4 Described

• If = 50:1 CFD Leverage - Used CFDs Leverage & MetaTrader 4 CFD Margin Calculation

Then cfd trading margin requirement on MetaTrader 4 cfd Platform = 1/50 *100= 2%

If you have $1,000,

1,000* 50 = $50,000.

1,000 / 50,000 * 100= 2%

(Simplify - your cfd capital is $1,000 after cfd leverage you now control $50,000 - $1,000 is what percentage of $50,000 - it's 2 %) that's your cfd margin requirement on MetaTrader 4 cfd Platform

• If = 20:1 CFDs Leverage - Used CFDs Leverage & MetaTrader 4 CFD Margin Calculation

Then the cfd trading margin requirement on MetaTrader 4 cfd Platform = 1/20 *100= 5%

If you have $1,000,

1,000* 20 = $20,000.

1,000 / 20,000 * 100= 5%

(Simplify - your cfd capital is $1,000 after cfd leverage you now control $20,000 - $1,000 is what percent of $20,000 - it's 5 %) that's your cfd margin requirement on MetaTrader 4 cfd Platform

• If = 10:1 CFD Leverage - Used CFDs Leverage & MetaTrader 4 CFD Margin Calculation

Then the cfd trading margin on MetaTrader 4 cfd Platform requirement is = 1/10 *100= 10%

If you have $1,000,

1,000* 10 = $10,000.

1,000 / 10,000 * 100= 10%

(Simplify - your cfd capital is $1,000 after cfd leverage you now control $10,000 - $1,000 is what percent of $10,000 - it's 10 %) that's your cfd margin requirement on MetaTrader 4 cfd Platform

What's The Difference Between Maximum CFDs Leverage and Used CFD Leverage?

However, you should note that there's a difference between maximum cfd trading leverage ( cfd leverage given by your cfd broker which is the highest cfd leverage you can trade with if you select to) and used cfd trading leverage ( cfd leverage depending on the lots you have opened/open positions on MetaTrader 4 cfd Platform). One is the broker's (Maximum CFD Leverage) and the other is cfd trader's (Used CFD Leverage). To explain this cfd used cfd leverage & maximum cfd leverage concept we shall use the cfd example above:

If your cfd broker has given you 100:1 Maximum CFD Leverage, but you only open a trade of 10,000 dollars on MetaTrader 4 cfd Platform then Used CFD Leverage is:

10,000 dollars: 1,000 dollars (your money)

10:1

You will have used 10:1 CFD Leverage on MetaTrader 4 cfd Platform, but your maximum cfd leverage is still 100:1 CFD Leverage. This means that even if you're given 100:1 Maximum CFD Leverage or 400:1 Maximum CFD Leverage, you do not have to use all of it. It is best to keep your used cfd leverage to a maximum of 10:1 while trading in the MetaTrader 4 cfd Platform but you will still select 100:1 maximum cfd leverage option for your cfd trading account. The extra cfd leverage will give you what we call Free CFDs Margin on the on MetaTrader 4 cfd Platform, As long as you have some Free margin on your MT4 cfd account then your open cfds trades will not get closed by your cfd broker because this margin requirement will remain above the required level on the MetaTrader 4 cfd Platform.

When it comes to cfd trading one of your rules: cfd money management rules on your cfd plan should be to use cfd leverage below 5:1.

In the above MT4 cfd screenshot example, the trader is using $2683.07, total controlled amount is $268,307, but cfd account equity is $16,116.55, therefore used cfds trading leverage is ($268,307 divide by 16,116.55) = 16.64 : 1

16.64 : 1 Used CFD Leverage

CFD Margin accounts allows traders to control a large amounts of cfd units using trading leverage using little of their own capital while borrowing the rest

Obtaining this MT4 cfd account will enable you to borrow money from the broker to trade cfd trading lots with.

The amount of borrowing power your account gives you what is known as ' cfd leverage", and is usually expressed as a ratio - a ratio of 100:1 trading leverage means you can control resources worth 100 times your deposit amount.

What this means in CFD terms is that with 1% margin in your cfd trading account you can control a trade worth $100,000 with a $1,000 deposit.

However, Trading this margin cfd account increases both potential for profits as well as losses. In CFD you can never lose more than you invest, losses are limited to your deposits & usually brokers will close-out a trade which extends beyond your deposit amount by executing a margin call. CFD traders must therefore try to keep their margin requirement level above that required. By using cfd money management rules & keeping your used cfd leverage below 5:1.