Margin Calls

For Oanda FX.

Assuming trading in EUR/GBP.
Short 200 units at 0.72013.

Position Value = 200 x 0.72013
= 144.026 GBP

Assuming GBP/USD sell at 1.99266,
Convert to USD = 144.026 x 1.99266
= 286.9948 USD

Assuming leverage 20:1,
leverage = 1/20 x 100 = 5%

Margin used = 5% x 286.9948
= 14.3497 USD

Oanda requires that: Margin Used/2 < style="font-weight: bold;">Where should I put my Stop Loss?
You will need to know how much does 1 pip equal?

Assuming I short 200 units, each pip costs +
200 units x .0001 (for Japanese Yen it is 200 x .01) = 0.2 GBP
Assuming GBP/USD sells at 1.99266
Convert to USD,1 pip = 0.2 x 1.99266
= 0.0398 USD


Assuming you have USD 40 Net Asset Value, how many pips can you lose before a Margin Call is triggerred?

Answer:
40/0.0398 = 1005 pips

Therefore, theoretically, you can place a Stop Loss 1005 pips away from your entry point!
However that would wipe out your USD 40 capital.

Let's say we only want to use USD20 for Stop Loss, how many pips can that cover?
Answer:
20/0.0398 = 502 pips

Please also remember that the Net Asset Value dynamically decreases when the Unrealized P & L increases. So if you plan to risk USD10 for Stop Loss, you should minus USD20 fromt he present Balance in your account and see if there is sufficient fund left!