Leverage and Margin
TRADING ON LEVERAGE
Because of the deep liquidity in the forex market, you can trade forex on leverage. This can allow you to take advantage of even the smallest moves in the market. When you trade with FXCM, your trades are executed using borrowed money. For example, 50:1 leverage allows you to trade with $10,000 in the market by setting aside only $200 as a security deposit.
FXCM offers 3 leverage tiers based on trader experience and account type. Traders that are new to the FX and CFD market are defaulted to 50:1 leverage. Experienced traders may trade with up to 400:1 leverage on FX and up to 200:1 on CFDs.
|Up to 50:1 on FX and CFDs||Up to 50:1 on FX and CFDs||Up to 50:1 on FX and CFDs|
|Up to 400:1 on FX||Up to 100:1 on FX||Up to 100:1 on FX|
|Up to 200:1 on CFDs||Up to 200:1 on CFDs||Up to 200:1 on CFDs|
WHAT IS MARGIN?
Margin can be thought of as a good faith deposit required to maintain open positions. This is not a fee or a transaction cost, it is simply a portion of your account equity set aside and allocated as a margin deposit. The amount of margin that you are required to put up for each currency pair varies by the leverage profiles listed above. For example, a new trader (on 50:1 leverage) may be required to put up $200 to hold a $10,000 position. An experienced trader (on 100:1 leverage) would only be required to put up $100 to hold a $10,000 position.
Up-to-date margin requirements are displayed in the “Simplified Dealing Rates’” window of the Trading Station by currency pair.
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 agains 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. You can view upcoming margin changes below:
Leverage: Leverage is a double-edged sword and can dramatically amplify your profits. It can also just as dramatically amplify your losses. Trading foreign exchange with any level of leverage may not be suitable for all investors.
Mini Accounts: Mini accounts offer 18 CFD instruments and up to 21 currency pairs. FXCM may decide at its sole discretion to add or remove any CFD instruments and currency pairs. Mini accounts default to Dealing Desk execution where price arbitrage strategies are prohibited. FXCM determines, at its sole discretion, what encompasses a price arbitrage strategy. Mini accounts utilising prohibited strategies may be switched to No Dealing Desk execution. Mini accounts settings may also be switched to No Dealing Desk execution at the sole discretion of FXCM in some instances. Mini accounts offer spreads plus mark-up pricing. Spreads are variable and are subject to delay. Experienced traders on Mini accounts with equity less than 10,000 CCY have 400:1 forex leverage; between 10,000 and 20,000, have 200:1. Traders that are new to FX and CFD trading will be defaulted to 50:1 leverage. Depending on the experience of the trader, Mini accounts with equity greater than 20,000 CCY may be switched to a Standard account with 50:1 or 100:1 forex leverage, No Dealing Desk execution, and commission based pricing.