Initial margin requirement definition
Initial margin requirement
The initial margin requirement is the amount of money required to open a position in a given market through a brokerage. It is usually represented as a percentage of the total amount you seek to open as a position.
A trader looking to trade $100,000 in the forex marketplace may pay $10,000 to a brokerage as a 10% initial margin requirement and would still get the total $100,000 exposure through the brokerage.
How do I calculate the initial margin requirement?
You can calculate the initial margin requirement by multiplying the margin percentage by the purchase price of a given asset. The margin percentage may differ depending on the market and the leverage offered by your brokerage.
In a simplified example, you are looking to buy $100,000 worth of a security through a brokerage that requires an initial margin of 50%, your initial margin requirement will cost $50,000.