What's the Formula Used to Calculate Margin?

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

Stocks Margin, Margin Required, Equity, Used Stock Margin & Free Stock Margin

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

What's Equity? : It is total amount of capital you have in your stocks account.

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

In other words, because your stocks 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 stocks leverage he has given you.

What's Free Stock Margin? : amount in your stocks account that you can use to open new trades. This is amount of money in your account which hasn't yet been stocks 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 stock trades as will be explained below.

Example of Formula for How to Calculate Stock Margin on MT4

The stocks margin example in MT4 stocks Platform below, the set stock leverage ratio is 100:1, the stocks 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 & borrowed the rest, with this set at 100:1, the trader is using 1 % of their capital, this 1% is equal to $2683.07, if 1% is equal to $2683.07 then 100% is $268,307

MT4 Stock Leverage Margin Calculation - Example of Used Margin & Free Margin in MT4 Platform