“VOLUME” is the financial size of your position in the market, not the funds required to trade. For the purposes of talking “in” the financial markets;

1 lot = 100,000 = @ 200:1 = \$500 risk to client

1 mini lot = 10,000 = @ 200:1 = \$50 risk to client

1 micro lot = 1,000= @ 200:1 = \$5 risk to client

Before you trade with any broker check to see what their definition of a “lot” is, some actually call 1 lot 5,000.

Leverage and Margin requirements

10:1 = 10%

25:1 = 4 %

50:1 = 2 %

100:1 = 1 %

200:1 = 0.5 %

400:1 = 0.25 %

For any other % simply divide, 100/leverage,  to give your margin requirement.

Margin

“MARGIN” is the actual amount of collateral required by the broker to allow the trader to open a position.

Example

1lot = 100,000 units in the market

At 1:200 leverage = 100,000/200 = 500

So to open a \$100,000  position the trader has a financial risk of \$500

Example

1mini lot = 10,000 units in the market

At 1:200 leverage = 10,000/200 = 50

So to open a \$10,000  position the trader has a financial risk of \$50

Example

1micro lot = 1,000 units in the market

At 1:200 leverage = 1,000/200 = 5

So to open a \$1,000  position the trader has a financial risk of \$5

Higher volume trades will require more “margin” by the broker, this will vary from broker to broker. Typical thresholds may be:

Trades up to 1,000,000 Volume = 1:200

Above 1,000,000 to 3,000,000 = 1:100

Above 3,000,000 = 1:50

Example

The margin requirement of 1,400,000 USD/JPY position

1,000,000 has a 0.5% margin requirement (200:1 leverage) which equals: \$5,000

400,000 has a 1% margin requirement (100:1 leverage) which equals: \$4,000

Total (\$5,000+\$4,000) = \$9,000

Some brokers have now changed the way they calculate the “Margin” requirements to open a position.

Example

Buy 1.0 Lot EURUSD at 1.3000

Margin Requirement for EURUSD: 0.5% (200:1)

Margin Usage would be = 100,000 x 1.3000 x 0.5% = \$650

Under current settings, when a Hedged Sell 1.0 Lot EURUSD was entered, the Used Margin would drop to \$0.

In the new setting, the Used Margin will remain at \$650.

Example