# Margin & Free Margin problem on BackTest ?

Hello everyone, I hope you're well.

I'm still a beginner with this fabulous Metatrader software, but I do have a small question about calculating free margin during a backtest.

For example, when I have 2 positions open at the same time, 1 long and 1 short, on an initial capital of \$100 I should have a free margin of only \$26,64 (using the following calculation : 100 \$ - (36,68\$ x 2) = 26,64\$ ),  but I find that I have a larger margin than if I had only one position open.

Can someone explain to me what I've missed?

Best Reguards,
ZeroCafeine

You should also do further research to better understand.

ZeroCafeine: Can someone explain to me what I've missed?

Each position uses margin.

ZeroCafeineFor example, when I have 2 positions open at the same time, 1 long and 1 short, on an initial capital of \$100 I should have a free margin of only \$26,64 (using the following calculation : 100 \$ - (36,68\$ x 2) = 26,64\$ ),  but I find that I have a larger margin than if I had only one position open.

Margin is irrespective of trade direction, and usually also irrespective of a "hedged position" (two opposite trades), and usually both positions will have margin requirements.

Some contract specifications allow for a reduced margin requirement for a "hedged position", but that is not always the case.

It also depends of the broker/symbols settings, with 2 opposite positions on the same symbol, the margin can sometimes be "share" partially. See SYMBOL_MARGIN_HEDGED in the documentation.

ZeroCafeine: For example, when I have 2 positions open at the same time, 1 long and 1 short, on an initial capital of \$100 I should have a free margin of only \$26,64 (using the following calculation : 100 \$ - (36,68\$ x 2) = 26,64\$ ),  but I find that I have a larger margin than if I had only one position open.

This is also one of the reasons why "same symbol hedging" to "recover a loss" is worse than just using a stop-loss — it consumes double the trading costs and increases the deposit load.

Using a "netting" mentality is always best to have a healthy trading attitude.

William Roeder #:
Each position uses margin.

Thank you very much and yes, I completely agree with you and it's quite normal that for each open position you need to use margin,

All right, if I have two open positions, then I have to use twice the margin, whatever the direction of the position,

But in my case, the margin is used as if I had a single position when in fact I have two.

Alain Verleyen #:
SYMBOL_MARGIN_HEDGED

Thank you very much, I'll take a look at this SYMBOL_MARGIN_HEDGED, I think I'm also going to contact my broker tomorrow to ask for an explanation 😊.

ZeroCafeine #: But in my case, the margin is used as if I had a single position when in fact I have two.

As I stated ... "Some contract specifications allow for a reduced margin requirement for a "hedged position", but that is not always the case."

And as Alain stated ... "It also depends of the broker/symbols settings, with 2 opposite positions on the same symbol, the margin can sometimes be "share" partially. See SYMBOL_MARGIN_HEDGED in the documentation."

William Roeder #:

Each position uses margin.

Thanks Fernando, I know how to calculate a margin needed a free margin on Forex with leverage, I will still take a look at your links if I can take something new, and I will return to this post if I have learned something new 🙂

ZeroCafeine #: Thanks Fernando, I know how to calculate a margin needed a free margin on Forex with leverage, I will still take a look at your links if I can take something new, and I will return to this post if I have learned something new 🙂

Look at the Contract Specifications to find out ...