Leverage and Margin

TRADING ON LEVERAGE

You can trade Forex and CFDs on leverage. This can allow you to take advantage of even the smallest moves in the market. When you trade with Leverage Portfolio, your trades are executed using borrowed money. For example, 30:1 leverage on a major forex pair like GBP/USD allows you to trade with £10,000 in the market by setting aside only around £334 as a security deposit.

Leverage Portfolio offers different leverage for different tradeable instruments.

  • 30:1 leverage restriction for major currency pairs
  • 20:1 for non-major currency pairs, gold and major indices
  • 10:1 for commodities other than gold and non-major equity indices
  • 2:1 for cryptocurrencies

To view up to date Margin Requirement please click here.

What is Margin?

In finance, the margin is the collateral that an investor has to deposit with their broker or exchange to cover the credit risk the holder poses for the broker or the exchange. An investor can create credit risk if they borrow cash from the broker to buy financial instruments, borrow financial instruments to sell them short, or enter into a derivative contract.

Leverage Portfolio accounts utilize a Tiered Margin system which consists of an Entry / Maintenance margin and a Liquidation margin.

Entry / Maintenance Margin – The initial good faith deposit or collateral set aside to open and then maintain a position. On the Trading Station platform the exact amount of margin required to open a position can be viewed in the "MMR" column under the "Simple Dealing Rates" tab or in the "Used Maint Mr" column under the "Accounts" tab -

Liquidation Margin (Minimum Required Margin) - Generally 50% of the Entry Margin, If your account equity falls below this level, all positions are closed.

Simple Dealing Rates

The Tiered Margin Watcher

Leverage Portfolio Tiered Margin Watcher is designed to notify you in advance of margin calls, which can give you more time to take action to potentially avoid them. Watch the video to find out more, or check out our

Do Margin requirements change?

Margin requirements can periodically change to account for changes in market volatility and currency exchange rates. For example, the margin requirement (MMR) for a specific currency pair is calculated as a percentage of the notional value of such pair. As the exchange rates for any specific currency pair fluctuate up or down, the margin requirement for that pair must be adjusted. As an example, if the Euro strengthens against the US dollar, more margin will be required to hold a EUR/USD position in a US dollar denominated account. Leverage Portfolio does not anticipate more than one update a month, however extreme market movements or event risk may necessitate unscheduled intra-month updates.

The Trading Station tiered margin system consists of two components:

  1. Initial Entry/Maintenance Margin – The initial good faith deposit or collateral set aside to open and then maintain a position. The exact amount of margin required to open a position can be viewed in the "MMR" column under the "Simple Dealing Rates" tab on the Trading Station platform or in the "Used Maint Mr" column under the "Accounts" on the Trading Station platform.
  2. Liquidation Margin (Minimum Required Margin) – The minimum amount of equity that must be in the account in order to continue holding the current open positions on the account. This is set at 50% of the value of the Maintenance Margin. If the account equity falls below this level, all positions will be automatically closed. The exact amount of margin required before automatic liquidation will occur can be found in the "Used Mr" column under the "Accounts" tab on the Trading Station platform.

MetaTrader 4 (MT4) Tiered Margin

Similar to Trading Station II accounts, MetaTrader 4 (MT4) accounts are defaulted to a tiered margin system. MT4 accounts do not use the Smart Margin system, but use a different version of Blobalasseststrade's tiered margin and margin call procedures. The MT4 Tiered Margin system is designed to allow clients more time in which to manage their positions before the automatic liquidation of those positions occurs. Clients are able to see real-time updates of their margin status on the MT4 platform.

The MT4 platform does not allow Leverage Portfolio to include commissions in pre-trade margin calculations on client's pending orders. This means that if you place a trade with a small amount of available usable margin under the MT4 account, there is a risk that the execution of the orders could trigger immediate margin call right after the execution as the commission charges can result in insufficient margin to maintain your open positions. You should therefore ensure that you have reserved sufficient buffer usable margin before opening new trades.

The MT4 Tiered Margin system consists of two components:

  1. Entry / Maintenance Margin – The initial good faith deposit or collateral set aside to open and then maintain a position. The exact amount of margin required to open a position can be viewed in the "MMR" column under the "Simple Dealing Rates" tab on the Trading Station platform prior to execution or by viewing the label "Margin" under the "Trade" tab in the MT4 platform.
  2. Liquidation Margin (Minimum Required Margin) – The minimum amount of equity that must be in the account in order to continue holding the current open positions on the account. This is set at 50% of the value of the Maintenance Margin and automatic liquidation will trigger when the "Margin Level" label under the "Trade" tab in the MT4 platform reads "50%" or below.

Do Margin requirements change?

Margin requirements can periodically change to account for changes in market volatility and currency exchange rates. For example, the margin requirement (MMR) for a specific currency pair is calculated as a percentage of the notional value of such pair. As the exchange rates for any specific currency pair fluctuate up or down, the margin requirement for that pair must be adjusted. As an example, if the Euro strengthens against the US dollar, more margin will be required to hold a EUR/USD position in a US dollar denominated account. FXCM does not anticipate more than one update a month, however extreme market movements or event risk may necessitate unscheduled intra-month updates.