What is required deposit?
In the previous step, you’ve learned how to identify leverage level
So, to trade currency what is the minimum deposit will you need?
In this step, our website will introduce you to “Deposit”, the minimum amount needed to trade.
- Money to be deposited into a FOREX trading account is “Asset” (Deposit)
- Minimum amount needed when to make real trading is Required deposit
These two types are the same but please beware of their different meanings
How to calculate required deposit
If you apply the following calculation formula, you can easily calculate it.
[estimated rate] × [currency units] ÷ [maximum leverage]=[required deposit]
Example 1: When the EUR /USD exchange rate is 1.11500 $, you place the order with the transaction amount of 2,000 currency, and the maximum leverage by the FOREX trading company also provided is 888:1, then the formula will be as follows.
［1.11500$］×［2,000 currency units］÷［888 times］＝2.6$
As you can see in the example above you can trade EUR /USD if you have a minimum of $ 2.6.
Of course, with the same trading amount, if the exchange rate changes, the required deposit will also change accordingly.
Example 2: When you trade 2000 currency units and the exchange rate of EUR /USD is 1.10000
［$1.0000］×［2,000 currency units］÷［888 times］＝2.2$
Let’s take another example. In this case you use up to 888:1 maximum leverage to place an order of 10,000 currency units when the USD /JPY exchange rate is 105.00 yen.
［105.00JPY］×［10,000 currency units］÷［888 times］＝1,182JPY
In the example above, ¥ 1,182 will become the required deposit, if your FOREX trading account is opened as USD account , that amount will be automatically calculated at the USD rate by that time.
In this example, because the USD /JPY exchange rate is 105.00 yen, the formula will be as follows.
［（required margin）1,182JPY］÷［（ USD/JPY exchange rate）105.00JPY］＝［（required deposit in USD）$11.26］
When deposit goes below 20%, it will become Loss Cut , so 20% must be added to the mentioned deposit required to become the minimum amount required to trade currencies.
Next time, please introduce forced payment (stop out) and loss cutting, forced payment for loss