How to calculate the margin using floating leverage?

Floating leverage or Flexible leverage changes as the notional value (i.e., volume of the open positions) increases. This means that the higher the volume of your order, the lower the leverage becomes. When the leverage is reduced, the margin requirements for your open position will increase.

Example 1

Assume you open a new BUY position 0.5 lot of GBPUSD 1.27422 for a USD trading account. What you need to note:

• GBPUSD - is a Major pair
• The quote currency is the same as your trading account currency.
• The USDJPY contract size is 100`000
• Your Lot size (volume) = 0.5 lots The Open Price is 139.400

You can check the Contract Size for each instrument on the Contract Specifications page. Click on the Instrument name to see full details.

So the notional value for this trade will be calculated as follows: 0.5 * 100`000 * 1.27422  = 63`711 USD

Based on our floating leverage table above, a notional value below 100`000 USD will apply the 1:3000 leverage. To calculate the Maring required to open your position, you need:

63`711 / 3000 = 21.237 USD

Example 2

Now let's assume you are opening a BUY position of EURUSD 5 lots for 1.07234.

Notional volume = 5 * 100`000 * 1.07234 = 536`170 USD

In that case, your notional value goes beyond the first Tier. With the floating leverage that means that Leverage Applied will gradually decrease. For the first 100`000 USD, the leverage 1:3000 will be applied. And for the remaining amount 1:1000. 

Here is how it is calculated:

• First Tier includes notional value up to 100`000 USD. So we need to take 100`000 and divide it by applied leverage of 1:3000:
  
  First Tier: 100`000 / 3000 = 33.3 USD
• Now you deduct 100`000 from your notional value, leaving you with the 436`170 USD. This will fall under the Second Tier: Second Tier: 436`170 / 1000 = 436.170 USD
• Now you need to summarise the Margin required: your Total Margin required = 33.3 + 436.170 = 469.47 USD