Leverage Calculator

What is a leverage calculator?

A leverage calculator is a tool that helps traders calculate the margin requirement based on their ratio for crypto, forex, and stock trading.

One of the most important aspects of risk management in leveraged trading is to be able to calculate your margin requirement for each position you open in any leveraged product.

Without knowing the margin requirement at different leverage ratios you might be throwing your entire account on one single position and if you are using high leverage you might get completely wiped out.

So, in this short tutorial, I will share a calculator where you can calculate your margin capital before opening any position. Another great way to use the calculator is simply to calculate how much money you need to deposit to open a certain position.

Calculate how much of your margin capital you need to add to open a leveraged position at your chosen ratio.

Why is it important for traders?

When trading with leverage, having a calculator to calculate your margin requirement is essential to know how much capital you need for each position when trading crypto, forex and stocks.

When you add credit to a position your margin requirements fall but you still need to use your capital to open a trade. The calculation is not that complicated but it always helps to use a calculator. Through our calculator above you can insert all the criteria for your trade, including the margin to calculate your biggest position size.

When calculating your position you need to know five things, the ticker, your deposit currency, the ratio, the position size (or units), and the price of the asset when calculating. If you don’t modify the price of the asset, our calculator will calculate based on the current market price of the asset.

How much margin capital do you need?

To calculate your needed margin capital for your leveraged position simply use the calculator we have provided. Here you can insert all the criteria for your position.

Start with the instrument you are trading, then choose your local currency, next add your ratio for the position, choose the position size you want to open, insert the price of the asset, and then click calculate.

The calculator will tell you how much of your capital is needed to open the position at the chosen ratio. Now you can fund your account knowing how much you need to get started.

Benefits of using this calculator

The benefit of knowing how to calculate your leverage and required margin is that you can manage your risk much better when you know how much of your own capital is being used for each position.

It happens quite frequently that new traders don’t know how much of their own capital they are putting into each position and they end up losing 25%-50% of their total account because they were not well educated. Below is a list of the biggest benefits of using a calculator:

• Risk management – For a beginner, it might not be obvious why calculating your leveraged position is so important, but if you think about how fast you might lose your money when trading with high margin you will see that it’s easy to bet the whole account in one trade. This is something that you want to avoid and with a calculator, you will see exactly how much risk you are taking with each trade.
• Margin requirement – Let’s say that you have a $1000 account and you want to open 5 different positions in different markets with 1:10 leverage, then you need to know how to calculate your margin requirement that you will spread out among these positions.
• Position sizing – On some occasions, if you want to reduce your position sizes and spread out your account over several trades, then it’s very important that you know how to calculate your position size in leverage trading.
• Control – To have overall control over your trading activities is a must to not spiral down a bad losing streak, take on too much risk, or lose more money than necessary. Use this calculator to find out exactly how much of your money you are spending on each trade.

When I use leverage for my positions I always know exactly how much of my own margin is required for each position and that way I know how much I stand to lose if things were to go south. See this as one of your first tools in risk management while trading.

Keep these factors separate when calculating

Here is another very important topic for beginner investors and traders. Leverage and margin can be difficult to separate and it becomes even more difficult when it’s time to calculate. However, if you want to stay on top of this game here is the magic rule you can use whenever you question yourself:

• Margin = Your own capital
• Leverage = The borrowed capital you receive from your broker

If you can separate these two variables you will have a much easier time understanding your risk factors and also how much money you are required to deposit to open a certain position size. Now, our calculator at the top will tell you the margin requirement for the position you are inserting so keep in mind that the calculated dollar amount is what is required from your capital to open the position.

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