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MARGIN REQUIREMENTS


The leverage available in online trading is one of the main advantages of Forex and CFD markets for many investors. Trading on margin, another name for leveraged trading, does not require from the trader to put up the full amount of the position.

 
Margin is the required equity that an investor must deposit to collateralize a position.

Leverage in financial markets

Leverage is the ratio between the deposited funds and the amount which can be operated. Being one of the main advantages of trading Forex, leverage is a type of virtual money trading which may increase your purchasing power. For instance, 1:100 leverage shows that you may control 100,000 by depositing only 1,000 (1%). In other words, leverage allows traders to operate larger funds. Trading Forex without leverage may be afforded only by those traders who posses really large accounts. For others leveraged trading is the only way to participate in currency or CFD trading alongside with big traders.

Forex Ltd provides up to 1:100 leverage for currency pairs and indices and 1:10 leverage for CFDs. The leverage enables you to increase potential returns while investing only a part of the position volume. However, at the same time your potential risk also increases greatly . So before making a decision to invest in highly leveraged markets you should thoroughly consider your level of experience, investment aims, and level of risk you are ready to accept.

MARGIN EXAMPLES

Margin requirements are the same for all account types, but differ from one financial instrument to another. The table below shows you the examples of the required margin with different volume and leverage.

Instrument Volume Margin Leverage
EUR/USD 1 lot 1 000 EUR 1:100
USD/JPY 2 lots 4 000 USD 1:50
#AA 1 lot 100 shares 1:10

If the required margin is indicated in shares or currency other than the account deposit currency it is converted to the deposit currency according to the current rate in the market.

STOP OUT

To eliminate the risk of losing more money than deposited by the trader Forex Ltd implements Stop Out, which closes the most unprofitable (in case of lack of unprofitable positions Ц the least profitable) open Client position at the current market price. The trading account achieves Stop Out condition, when the Margin Level percentage indicator falls to 20.00% and lower.

The specified indicator is continuously displayed in the MetaTrader 4 Forex Ltd trading terminal. Stop Out is activated in real time and automatically executed

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