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What is Margin?
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Using Margin in Forex Trading
Long Short. Oil - US Crude. Wall Street. News Gold Q2 Technical Forecast More View more. Previous Article Next Article. What is Forex Margin? Recommended by Richard Snow. Use money management to avoid margin call - See page Get My Guide. Foundational Trading Knowledge 1. Forex for Beginners. Forex Trading Basics. Why Trade Forex?
Leverage and Margin
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First Name: Please fill out this field. Please enter valid First Name. Last Name: Please fill out this field. Please enter valid Last Name. E-Mail: Please fill out this field. Please enter valid email. Please select a country. Close window. The result of this is incredible leverage; providing traders the means to magnify potential trading profits much more than had they been required to invest the total face value of the contract traded.
Using Margin in Forex Trading
The margin must be provided before any trade is executed. It is also prudent to deposit additional funds to cover any margin requirements should the trade not perform as expected.
If markets move against the trade, the margin covers the loss until that loss is actually realised. If markets move in favor of the trade, the margin remains in the account. If markets move against the trade and then return to profitability, the margin is returned. It is a security buffer to ensure all market participants can honor their trading obligations. Closure of positions is performed on a best endeavors basis, with best execution always a priority. There will be certain occasions when the Bid-Ask spread widens beyond the average market spread.
This is usually a result of market illiquidity such as at market open, or during rollover at PM GMT for example, the spreads may widen in response to uncertainty regards market direction or to increased market volatility. Trade rollover is typically a very quiet period in the market, since the business day in New York has recently closed and there are still a few hours before the day begins in Tokyo. Already trading with us? Transactions conducted in the SWFX marketplace may be done on a margin trading basis, enabling a client to execute trades larger than the deposit, amplifying price movement effect.
The multi-currency exposure of the account is limited by the total trading line which is calculated by multiplying the Equity of the account by the leverage agreed with Dukascopy Europe. Maximum leverage values applicable to every trading instrument are found in the table below:.
In order to protect clients from incurring liability above their equity and protect Dukascopy Europe from associated risks, the following minimum margin policy applies: The minimum equity requirement for the self-trading account is 20 EUR. For accounts with different base currency the minimum amount of equity is calculated at the corresponding rate of the latest settlement. All open positions may be closed and the account may be blocked should the equity on the account reach the minimum margin requirement. The minimum margin required to open a position depends on the leverage applicable to the trading instrument and current market prices.
The Use of Leverage is an indicator showing how much of the collateral is currently used by the exposure on the trading account.
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It is displayed in percentage in real-time and calculated as follows:.