FOREX Margin Requirements

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Margin Requirements and PIP Value Information

Spreads & Margins > Margin Requirements and PIP Value Information

Spreads, Margins, & PIPs

Speculative trading on the global Forex involves exchanging one currency for another in anticipation of a price change in your favor. As you know, there is a slight difference between the bid and ask prices for any given currency pair traded on the Forex. This difference is called the spread, and it is where the profit potential lays.

There are spreads between all currency pairs, and they average between 3 to 6 price interest points, or pips, on the major world currencies. eFOREX offers spreads as low as 2 pips in some cases. Pips are usually expressed in decimals, with the pip quoted as the last numbers of that decimal. A Forex trader's financial gain or loss is measured in pips, which are then converted into money.

Your first step to Forex trading is to open an eFOREX margin account. This is the account into which funds are deposited when you make a profit, or from which funds are deducted if your trades result in a loss. Opening a live Forex trading account at eFOREX is quick and easy, and you can begin trading in a matter of minutes, not hours.

Spreads

Margins

Margin Requirements and PIP Value Information

For your convenience, the table and examples below illustrate lot sizes and pip values**:

Lot Size (Notional Value)	Known As	Margin Requirements	Pip Value***
$100,000	A Standard Lot	$250 to enter position	$10
$10,000	A Mini Lot	$25 to enter position	$1
$1,000	A Micro Lot	$2.50 to enter position	$0.10

In order to demonstrate how different lot sizes affect your profits/losses, here are two examples:

Example 1: If trading a standard lot in the EUR/USD at 400:1 leverage, your margin requirement will be $250.

If you gain one pip, you will gain $10
If you lose one pip, you will lose $10

Example 2: If trading a micro lot in the EUR/USD at 400:1 leverage, your margin requirement will be $2.50.

If you gain one pip, you will gain $.1
If you lose one pip, you will lose $.1

For currency crosses ending in a currency other than the USD, pip values will differ according to the rate of the USD, but the margin requirements will remain the same.

* eFOREX is not responsible for client trading accounts being stopped out due to overleveraging or lack of funds in margin account. For additional information, see the eFOREX Client Agreement.

** Our platforms offer fractional pips, meaning that the last digit you see on the platform is one tenth of a pip (0.1 pip).

*** The pip value shown is based off of the EUR/USD. There may be some variance in the pip value based on the currency pair traded. The pip value would still change by lot size according to a power of ten.

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