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Currency contract margin calculation formula

Jul 24, 2024 pm 12:47 PM
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Calculation formula for position covering: funds required for position covering = (average opening price - average position covering price) × number of contracts × face value of the contract. Using this formula, traders can accurately calculate the funds to cover positions and timely cover positions to recover losses or lock in profits.

Currency contract margin calculation formula

Calculation formula for margin contract

Funds required to margin = (Average opening price - Average margin price) Number of contracts Face value of contract

Among them:

  • Average opening price: Buy when opening a position Or the average price of selling
  • Average covering price: the average price of buying or selling when covering a position
  • Number of contracts: the number of contracts traded
  • Contract face value: the value of each contract, usually 1 US dollar or 10 USD

Example:

Suppose Ms. Zhang buys 10 ETH contracts at an average opening price of US$10,000, with each contract worth US$10. When the price of ETH fell to $9,000, Ms. Zhang decided to cover her position in order to recover her losses.

Use the position cover calculation formula:

Funds required to cover the position = (10,000 - 9,000) 10 10 = 10,000 US dollars

Therefore, Ms. Zhang needs 10,000 US dollars to cover the position.

Using the position cover calculation formula, traders can accurately calculate the funds required to cover positions so that they can take timely action to avoid further losses or lock in profits.

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