This article has been translated from English to Gen Z Slang.

What do we mean by "Used Margin"?

Alright fam, to vibe with the concept of Used Margin, let's peep what Required Margin is first.

Whenever you flex a new position, a certain vibe of Required Margin gotta be set aside.

So, we already spilled the tea on Required Margin in the previous vibe, so if you're lost, go check the deets in our What is Margin? vibe first.

If you're feeling ambitious and rollin' with multiple positions, each one's gotta have its own Required Margin.

Required Margin

Add up all that Required Margin goodness of all your open positions, and boom, that's your Used Margin.

Used Margin

Used Margin is all that margin chillin’ out, locked up, and not available to make new moves.

That margin is already doing its thing, hence the name, Used Margin.

While Required Margin is tied up with a SPECIFIC trade, Used Margin shows the amount of cash you needed to keep ALL your trades livin'.

Example: Go long on USD/JPY and USD/CHF

Alright, imagine you tossed $1,000 into your account and you’re itching to grab TWO positions:

  1. Long USD/JPY and no cap, wanna open 1 mini lot (10,000 units) position.
  2. Long USD/CHF and wanna do the same, 1 mini lot (10,000 units).

The Margin Requirement for each currency pair goes like this:

Currency Pair Margin Requirement
USD/JPY 4%
USD/CHF 3%

So how much margin (“Required Margin”) do you need to finesse each position?

Seeing as USD is your ride-or-die base currency for both pairs, mini lot vibes mean EACH position's value is $10,000.

Let’s crunch them numbers and vibe with the Required Margin for EACH position.

USD/JPY Position

The Margin Requirement for USD/JPY is at a cool 4%. Assuming your trading account vibes in USD, the Required Margin would be $400.

Required Margin = Notional Value x Margin Requirement

$400 = $10,000 x 0.04

USD/CHF Position

The Margin Requirement for USD/CHF is at a breezy 3%.

With your trading account still rockin' USD, the Required Margin would be $300.

Required Margin = Notional Value x Margin Requirement

$300 = $10,000 x 0.03

Since you’re rollin’ with TWO trades, the Used Margin in your trading account would be $700.

Used Margin = Sum of Required Margin from ALL open positions

$700 = $400 (USD/JPY) + $300 (USD/CHF)

Peep this fresh diagram that breaks down how Used Margin vibes with Required Margin and your Balance. Used Margin

Recap

This lesson was enlightening, and we discovered how to roll with the following:

  • Used Margin is the TOTAL amount of margin that's keeping all open positions running.
  • Basically, it’s the SUM of all Required Margin you got in play.

In the previous episodes, we explorin’:

On to the next — let’s decode the vibes of Equity.