Margin & Leverage FAQs
- What is margin?
- What is leverage?
- What are the margin requirements at FOREX.com?
- How do I change my account leverage or margin?
- What are step margin levels?
- Can my account go negative?
What is margin?
Margin is equity from your account set aside by FOREX.com to maintain a position when you’re trading on leverage.
What is leverage?
Leverage is the ability to control a large position with a small amount of capital. It is usually denoted by a ratio. For example, if your account has a leverage of 50:1, that means you can trade a position of $50,000 with only $1,000. Please note that increased leverage increases risk.
What are the margin requirements at FOREX.com?
Our margin requirements differ according to platform (FOREX.com or MetaTrader), market, asset class and position size. You can find the specific margin of each instrument in its Market 360 section of the FOREX.com Web Trader platform or view our list of margin requirements by product.
To calculate the amount of funds required to cover the margin requirement when you open a trade, simply multiply the total notional value of your trade (quantity x price of instrument) by the margin factor.
For example, say the margin requirement for EUR/USD is 2%. The current buy price of EUR/USD is 1.300 and you wish to buy 1 standard lot (100,000).
The total value of the position is $130,000 (100,000 x 1.300). $2,600 would therefore be allocated from your account to open the position ($130,000 x 2%).
With FOREX.com platforms, you can calculate the required margin before placing a trade through the platform’s margin calculator, monitor each position’s margin requirement separately or review your account’s total margin requirement through the Margin Indicator.
How do I change my account leverage or margin?
The FOREX.com platform does not support changing from the default leverage setting of 50:1. MetaTrader 4 accounts can be reduced to 10:1 and 20:1. Keep in mind that increased leverage increases risk. Please fill out a Margin Change Request Form and submit it to [email protected].
What are step margin levels?
The larger the trade size, the higher the risk level associated with the trade. Therefore, we may increase our margin requirements for larger size trades or any additional trades in that instrument. To do this, FOREX.com increases the size of the margin requirement at specific quantity levels, known as step margin levels. You can view a market’s step margin levels in its Market 360 section within the FOREX.com Web Trader platform.
Step margins are not present in MetaTrader 4.
Can my account go negative?
While our 100% margin requirement and real-time margin system is designed to limit your trading losses and help ensure that total losses never exceed your total account balance, you do risk incurring losses greater than your account balance, especially during periods of extreme market volatility. While it is not FOREX.com’s policy to hold clients responsible for modest negative balances, we do reserve the right to hold clients responsible for large debit balances and when special circumstances apply. For this reason, we strongly encourage you to manage your use of leverage carefully.
The FOREX.com platform does not support changing from the default leverage setting of 50:1. MetaTrader 4 accounts can be reduced to 10:1 and 20:1. Keep in mind that increased leverage increases risk. You can request a change to your level of leverage by filling out a Margin Change Request Form and submitting it to [email protected].