What is the Formula Used to Calculate Margin?

The following oil trading terms are used in the formula of how to calculate oil trading margin.

Oil Trading Margin, Margin Required, Equity, Used Oil Trading Margin & Free Oil Trading Margin

What's Margin Required? : It is the amount of money your oil broker requires from you to open a position. It is expressed in percentages.

What is Equity? : It is the total amount of capital you've in your crude oil trading account.

What is Used Crude Oil Trading Margin? : amount of money in your crude oil account which has already been used up when buying a oil lot, this contract is the one that's displayed in open trades. As a trader you cannot use this amount of money after opening a oil trade because you have already used it to open another trade and it is not available to you.

In other words, because your oil broker has opened up a position for you using the capital you have borrowed, you must maintain this usable margin for your trading account as a security to allow you to continue using this oil leverage he has given you.

What is Free Crude Oil Trading Margin? : amount in your crude oil account that you can use to open new trades. This is the amount of money in your account that has not yet been oil trading leveraged because you have not yet opened a transaction with this money - this is also very important for you as a trader because it enables you as a trader to continue holding your open crude oil trades as will be described below.

Example of Formula for How to Calculate Oil Trading Margin in MT4

The oil margin example in MT4 oil Software below, the set crude oil leverage ratio is 100:1, the oil trading margin which is 1% is $2683.07, therefore the total amount controlled by the trader is: $268,307 - this is because with this leverage the trader has used little of his money and 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

What is the Formula Used to Calculate Crude Oil Trading Margin?