Example calculation of a margin call

jaapk85

Newbie
1 0
Hi everybody,

I am completely new to trading, but with the current low oil prices I would like to give it a go and gamble a little bit that they will be back on their old level in a few months. I want to spend no more than € 500, since that is an amount I would be "OK" with if I would lose it.

I would like to start on Plus500 and take a position in oil barrels, however i want to prevent a margin call when the prices go down just a little bit.

Can anyone tell me when (in the following situation) i would receive a margin call and in that case, what would happen to my account balance?

  • I add € 500 to my account
  • Assume (for clarity of calculations) that oil costs 20 euro per barrel and there is no spread
  • Leverage is 1:10
  • Initial margin is 10%
  • Maintenance margin is 5%
  • I take a position worth € 5.000 in oil (250 barrels)
  • At what price drop in oil would i receive a margin call?

  • And secondary, let's say that with the same investment of € 500 I would want to avoid a margin call if the price drops even as low as 10 euro per barrel. What position could i then take in oil?
I hope my question is clear and somebody is available to answer it.

Thank you in advance!
 
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