{"id":167,"date":"2023-11-29T15:15:21","date_gmt":"2023-11-29T15:15:21","guid":{"rendered":"https:\/\/fintechbnp.com\/index.php\/calculations\/"},"modified":"2023-11-29T15:16:28","modified_gmt":"2023-11-29T15:16:28","slug":"calculations","status":"publish","type":"page","link":"https:\/\/handelspunkt.net\/en\/calculations\/","title":{"rendered":"Calculations"},"content":{"rendered":"\t\t
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MARGIN TRADING<\/h2>\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t
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With Margin trading you can trade on a small amount of money.<\/p>

Trading on margin allows traders to take advantage of trading opportunities without having to worry about a huge capital investment to acquire an asset.<\/p>

Margin trading, on the other hand, entails using leverage to raise risk and potential returns. Margin is usually expressed as a percentage of the size of the forex positions and varies per forex broker. In the forex market, a 1% margin is common, meaning that dealers can control $100,000 of currency with just $1,000.<\/p>\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/section>\n\t\t\t\t

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CALCULATING MARGIN\n<\/h2>\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t
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The margin for a forex deal is calculated using a simple method. Simply multiply the trade size by the margin %. Then, from the remaining equity in your account, remove the margin utilized for all deals. The resulting figure is the amount of margin you have remaining.<\/p>\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t

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CALCULATING MARGIN EXAMPLE<\/h2>\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t
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Example:<\/strong><\/p>

Suppose you want to borrow $30,000 to buy a stock that you intend to hold for a period of 10 days where the margin interest rate is 6% annually.<\/p>\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t

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\n\t\t\t\t\t\tTo figure out how much it will cost you to borrow money, multiply the amount you want to borrow by the rate you\u2019ll be charged:
\n\n$30,000 x .06 (6%) = $1,800<\/strong>\t\t\t\t\t<\/p>\n\t\t\t\t\n\t\t\t<\/div>\n\t\t\t\n\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t

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\n\t\t\t\t\t\tThen divide the result by the number of days in a year to get the total. Rather from the expected 365 days, the brokerage sector typically employs 360 days.
\n$1,800 \/ 360 = 5<\/strong>\t\t\t\t\t<\/p>\n\t\t\t\t\n\t\t\t<\/div>\n\t\t\t\n\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t

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\n\t\t\t\t\t\tMultiply this figure by the total number of days you\u2019ve borrowed or expect to borrow the money on margin:
\n\n5 x 10 = $50<\/strong>\t\t\t\t\t<\/p>\n\t\t\t\t\n\t\t\t<\/div>\n\t\t\t\n\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/section>\n\t\t\t\t

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In this case, borrowing $30,000 for 10 days will cost you $50 in margin interest.<\/p>

While margin can be used to increase profits if the price of your investment rises and you make a Leveraged purchase, it can also increase losses if the price of your investment falls, resulting in a margin call, or the need to add more cash to your account to cover those paper losses.<\/p>

Remember that whether you profit or lose on a trade, you will still owe the same margin interest as the original transaction.<\/p>\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/section>\n\t\t\t\t

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FINAL THOUGHTS<\/h2>\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t
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\n\t\t\t\t\t\t\tTrading on margin is a risky business, but can be profitable if managed properly, and more importantly, if a trader does not overleverage themself. It also makes accessing certain asset values easier as a trader doesn\u2019t need to put up the total cost of an asset when they see an interesting trading opportunity. When entering a trade on margin, it\u2019s important to calculate the borrowing cost to determine what the true cost of the trade will be, which will accurately depict the profit or loss.\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/section>\n\t\t\t\t<\/div>\n\t\t","protected":false},"excerpt":{"rendered":"

MARGIN TRADING With Margin trading you can trade on a small amount of money. Trading on margin allows traders to take advantage of trading opportunities without having to worry about a huge capital investment to acquire an asset. Margin trading, on the other hand, entails using leverage to raise risk and potential returns. Margin is […]<\/p>\n","protected":false},"author":1,"featured_media":0,"parent":0,"menu_order":0,"comment_status":"closed","ping_status":"closed","template":"","meta":{"footnotes":""},"class_list":["post-167","page","type-page","status-publish","hentry"],"_links":{"self":[{"href":"https:\/\/handelspunkt.net\/en\/wp-json\/wp\/v2\/pages\/167","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/handelspunkt.net\/en\/wp-json\/wp\/v2\/pages"}],"about":[{"href":"https:\/\/handelspunkt.net\/en\/wp-json\/wp\/v2\/types\/page"}],"author":[{"embeddable":true,"href":"https:\/\/handelspunkt.net\/en\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/handelspunkt.net\/en\/wp-json\/wp\/v2\/comments?post=167"}],"version-history":[{"count":1,"href":"https:\/\/handelspunkt.net\/en\/wp-json\/wp\/v2\/pages\/167\/revisions"}],"predecessor-version":[{"id":1804,"href":"https:\/\/handelspunkt.net\/en\/wp-json\/wp\/v2\/pages\/167\/revisions\/1804"}],"wp:attachment":[{"href":"https:\/\/handelspunkt.net\/en\/wp-json\/wp\/v2\/media?parent=167"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}