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Margin / Leverage

Maximum Leverage Approximately 100:1*

Customizable Margin Settings Through MyFXCM.com

Up-To-Date Margin Requirements Displayed in the Platform

Never Pay Debit Balance as a Result of Trading

 

Snapshot for USD-Based Accounts


Note: A full list of up-to-date margin requirements can be viewed from the MMR column of the "Simple Dealing Rates" window within the platform.


Frequently asked questions regarding Margin and Leverage

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. Margin requirements (per 10K lot) are determined by taking a percentage of the notional trade size plus a small cushion. A cushion is added to help alleviate daily/weekly fluctuations.

Why trade on margin?
Trading on Margin (Trading with Leverage*) is a common attraction of the forex market. It allows you to open trades that are larger than the capital in your account.

Example
Trading on margin

In the example above, $1,000,000 have been purchased through a long USD/JPY position with a $50,000 account balance (20:1* Leverage).

Trading on margin can both positively and negatively affect your trading experience as both profits and losses can be dramatically amplified.

What leverage is offer?
Flexible leverage is offered on forex trading accounts. The maximum amount of leverage available is around 100:1*. The high degree of available leverage is a popular attraction for many traders to the forex market, and most traders use the default leverage (determined by the default margin settings). But the amount of leverage utilized in your trading is up to you.

Why is lower lower leverage encouraged?
When you use excessive leverage, a few losing trades can quickly offset many winning trades. To clearly see how this can happen, consider the following example.

Scenario: Trader A buys 50 lots of USD/JPY while Trader B buys 5 lots of USD/JPY.
Questions: What happens to Trader A and Trader B account equity when the USD/JPY price falls 100 pips against them?

Answer: Trader A loses 41.5% and Trader B loses 4.15% of their account equity.

Example

  TRADER A TRADER B
Account Equity $10,000 $10,000
Notional Trade Size $500,000 (Buys 50, 10K lots) $50,000 (Buys 5, 10K lots)
Leverage Used 50:1 (50 times) 5:1 (5 times)
100 Pip Loss in Dollars -$4,150 -$415
% Loss of Equity 41.5% 4.15%
% of Equity Remaining 58.5% 95.85%


By using lower leverage, Trader B drastically reduces the dollar drawdown of a 100 pip loss.

How can you increase your margin requirements?
The lowest available margin setting (also the default margin setting) is 1% for major currency pairs and 4% for exotic currency pairs. You can request to increase your margin settings at any time through your Account Profile at www.myfxcm.com. Simply choose the margin requirement you desire. (Margin changes can take as long as one business day to be reflected in your account.)

Where can I view up-to-date margin requirements?
Up-to-date margin requirements are listed by currency pair in the MMR column of the "Simple Dealing Rates" window within the platform.

* 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.




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