First, it is important to distinguish between Base Currency (aka Primary) and Term Currency (aka Secondary or Quote).
Symbol | Base Currency | Term Currency |
EURUSD | EUR | USD |
GBPUSD | GBP | USD |
USDJPY | USD | JPY |
GOLDEN RULE
Cash Used is always denominated in the Base Ccy*
*If your account currency is in a different currency than the Base Currency, then it will be converted to your account currency.
The formula is as follows:
Units (or Amount) x Margin%,
or, Units / Leverage
Example
- If you want to Buy 100,000 EURUSD with a margin percentage of 0.5%, then it is simply 100,000 x 0.5%= 500 EUR
- If I want to Buy 100,000 USDJPY with a margin percentage of 0.5%, then it is simply 100,000 x 0.5% = 500 USD
The final amount though depends on your account’s currency.
If your account currency is in EUR, then in the 1st example you’ll need 500 EUR as a margin, while in the 2nd example, you'll have to convert the 500 USD into EUR.
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