What is Margin and how does it affect me?

Amplify your trading exposure with the power of leverage

Trading on Margin (or with Leverage) allows you to execute trades far greater in size than your initial deposit, allowing you to magnify the price movement effect. This can work both FOR and AGAINST you so it is important that the you take care when selecting the amount of leverage to employ on your trading account.

If you set your account to an initial leverage of 1:200, it is the equivalent of trading on a 0.5% margin. For example, you would be able to speculate and buy 20,000 USD notional in your
trading terminal with only 100USD deposit in your account etc. (Leverage may be increased to
a maximum of 1:400 on special request for Professional Clients).

The minimum margin required to open a position depends on the chosen leverage,
currency pair, prevailing market prices and account type.

Please note for retail clients leverage restrictions will apply as per ESMA’s product intervention rule enforcements, please see more information here.

How is Margin calculated?

The below metrics will better help to explain the calculations which
are used in the trading platform

Account Balance The amount of funds you have deposited in your account
Net Equity Account Balance + unrealised profit - unrealised loss
Exposure Total value of the position opened
Margin Requirement %'age of the Exposure needed as equity to open a Position
Used Margin Exposure x Margin Requirement
Free Margin Net Equity - Used Margin
Margin Utilisation % (Net Equity / Used Margin) x 100

Margin Calls and Stop Out Levels

To protect both you and the credit exposure faced by the executing venue, a Margin Call will be enforced when your Margin Utilisation is less than or equal to the Margin Call Level. This will be via an indication on the trading platform, and provides you with the opportunity to deposit more funds or close out some of your losing positions.

Under this circumstance, you can only execute trades that reduce the trading exposure by closing or hedging existing net positions. You will not be able to open any new positions which may increase your trading exposure, until your Margin Utilisation rises above the Margin Call Level again.

Automatic Stop Outs and forced closing of positions will occur typically in the following scenarios:

- If your Margin utilisation drops below the Stop Out Level.

- If you remain on margin call constantly for 24 hours

- If you are on margin call going into the weekend

- If you are on margin call during periods of increased volatility, or periods when there is an
  anticipation of increased volatility

- Going into the weekend, if your equity is below 100% of your margin requirement, your positions
  will be at an increased risk of being closed on a Friday evening.

- Margin requirements are subject to change. If they increase on one or more of your
  positions then your current equity may not be enough to keep positions open.

Finally, it is important to remember that you could be closed out at any time during margin call.

How to calculate your Margin Requirement %

Please use the following formula to calculate the Margin required to open a position:

Margin Requirement % = Symbol Margin / Account Leverage

For example:

Account Leverage = 1:200
EURUSD Symbol Margin = 100%
Margin Requirement % = 100 / 200 = 0.5%

Note: You can find your Account Leverage in the Client Portal, and the Symbol margin is listed on the Trading Platform.

The above is for the MT4 platform, on cTrader the leverage per symbol is listed on the Leverage panel.


Trading Single Currencies on MetaTrader 4

Account Balance $25,000
Buy EUR 2 million (20 LOTS) EURUSD at 1.20000
Margin Requirement % 1%
Exposure $2,400,000
Used Margin $2,400,000 x 0.01 = $24,000
Margin Utilisation ($25,000 / $24,000) x 100 = 104%
Margin Call / Stop Out Level 100% / 50%

1. Now the position suffers a floating loss of -$1,000,
    so Net Equity = $25,000 - $1,000 = $24,000

2. Margin Utilisation now equals ($24,000/$24,000) x 100 = 100%


3. The position continues to move against you and the total loss is now -$13,000,
    so Net Equity = $25,000 - $13,000 = $12,000

4. Margin Utilisation now equals ($12,000/$24,000) x 100 = 50%


Leverage to Margin calculation

The following table illustrates each leverage level and its corresponding margin requirement If you would like to calculate the values yourself the following formula should be used (MT4 platform only):

Leverage = (Symbol Margin/Account Leverage (Y))

(where Leverage is specified in a X:Y format)

Account Leverage Symbol Margin Effective Margin
1:10 100% 10.0%
1:20 100% 5.00%
1:30 100% 3.33%
1:100 100% 1.00%
1:200 100% 0.50%
1:300 100% 0.33%
1:400 100% 0.25%

Account Leverage Symbol Margin Effective Margin
1:10 150% 15.0%
1:20 150% 7.50%
1:30 150% 5.00%
1:100 150% 1.50%
1:200 150% 0.75%
1:300 150% 0.50%
1:400 150% 0.38%

Account Leverage Symbol Margin Effective Margin
1:10 300% 30.0%
1:20 300% 15.0%
1:30 300% 10.0%
1:100 300% 3.00%
1:200 300% 1.50%
1:300 300% 1.00%
1:400 300% 0.75%

Margin Call / Stop Out Levels

Account Margin Call Stop Out
100% 50%*
100% 50%*
100% 100%*

For Retail Clients, the Margin Call and Stop Out Levels will be 100% and 50% respectivley.

For Professional Clients, the Margin Call and Stop Out Levels may not necessarily follow the %'age levels in the table above, and may be raised to 100% or higher depending on market conditions, and / or after an assessment on the risk profile of a clients account. We will inform you if there any changes from the default Margin Call and Stop Out Levels.