Everything a Trader Should Know about SPAN Margin Calculator

It is essential to know the SPAN margin you should have in your account while initiating a trade in F&O, currency and commodity segments. There are now online calculators for calculating this margin amount. Read this post to know some of the most important things about this margin calculator.

While trading F&O, currency, and commodity, traders are required to have what is known as SPAN margin in their trading account to cover the losses. If at all the trade doesn’t go as planned, the losses would be deducted from this margin amount. This margin money varies between securities as the underlying risk of every security is different.

To make it easier for the traders to know the SPAN margin requirement before initiating a trade, there are now online margin calculators. If you’re new to these market segments, here are some essential things that you should know about margin calculators.

What is a SPAN Calculator?

If you’ve ever traded in F&O, currency, or commodity market, you might know that you’re only required to have the margin amount in your trading account to initiate the trade. This margin amount is made up of SPAN margin and exposure margin.

The SPAN margin is the initial margin required to initiate the trade. The exposure margin, on the other hand, is like a safety net for protecting the liability of your broker. As the margin varies between securities, traders can use the margin calculator for calculating the margin before placing a trade.

Uses of the Calculator

The online margin calculators can be used for calculating the SPAN margin for equity, currency and commodity trades. Irrespective of whether you want to place a buy or sell order, the calculator allows you to calculate the margin for every trade.

You also get to choose the contract expiry and a number of lots for accurate calculation. Many of the calculators help you calculate the SPAN margin as well as the exposure margin.

How to use the Calculator?

Using a margin calculator is very easy. Just select the exchange, type of product, type of trade (Buy or Sell), scrip you’d like to trade, and the lot size. The calculator would automatically fetch the current price of the scrip you’ve selected.

Once all of these details are entered, click on the calculate button and the calculator will instantly provide you accurate results.

Tips for Using the Calculator

If you’re new to using SPAN margin calculator keep these tips in mind-

Make sure that you re-check all the details you’ve entered before clicking on the calculate button. This will ensure that you always get accurate margin calculation.

If you regularly trade in these segments, many of the calculators also allow you to create margin portfolios. Make use of this feature for enhanced convenience.

Most of the calculators provide total margin which is SPAN margin+exposure margin. You need to have this total margin in your trading account to initiate the trade.

Conclusion

If you regularly trade in F&O, currency or commodity markets, you might know how confusing it can be to know the margin requirements of trade. With the help of a margin calculator, you can accurately know the margin before placing a trade. This will help you place trades confidently, and you can also use it for working on multi-legged trading strategies.