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Margin / Leverage
Key Features |
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Frequently Asked Questions |
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What is leverage or margin?  |
| What leverage does FXCM offer? |
| How do I change my maximum margin? |
| Is the margin level the same for all currency pairs, including exotics? |
| Is there a debit balance risk? Can I lose more money than I deposit? |
| How do I track my margin? |
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| What is leverage or margin? |
| "Trading on Margin," and "Trading with Leverage" are two ways to describe the same thing; the ability to trade a position larger than the amount of money in your account. Leverage is expressed as a ratio, for example 20:1 or 100:1. Margin is expressed as a percentage of position size, for example 5% or 1%, or in monetary terms, such as $50 or $2,000.
FXCM sets margin in terms of required margin per lot. One lot of an FXCM account is 100,000 units of currency. (A unit of currency could be one dollar, one euro, one pound, etc. ) Therefore, $1000 in funds allows you to trade 100,000 units. (For simplicity, FXCM requires $1000 in funds for every 100K lot traded, regardless of the currency pair you choose to trade.) |
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| Examples of margin, using an FXCM 100k account. |
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| Leverage: |
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Margin %: |
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Margin $: |
| 200:1 |
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0.5% |
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$500 |
| 100:1 |
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1% |
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$1,000 |
| 25:1 |
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4% |
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$4,000 |
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| What leverage does FXCM offer? |
FXCM offers leverage of up to 200:1 on its Forex Trading Accounts. The high degree of available leverage is a popular attraction for many traders to the Forex market, and most FXCM traders use the default leverage. Mini accounts have a default leverage of 200:1, and 100k accounts default to 100:1. But the amount of leverage is up to you: depending on your risk tolerance it can range from 1:1 to 200:1.
*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 a high or even moderate level of leverage may not be suitable for all investors. |
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| How do I change my maximum margin? |
| You can request that your leverage be changed at any time through your FXCM Account Profile at www.myfxcm.com. Simply choose the margin requirement you desire (0.5% = 200:1 leverage, 1% = 100:1, 2% = 50:1, etc). (Margin changes can take as long as one business day to be reflected in your account.) The new maximum leverage will be applied to all major currencies you are trading |
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| Is the margin level the same for all currency pairs, including exotics? |
| The margin level is the same for all major currencies. FXCM offers trading in a limited number of more exotic currency pairs. The minimum margin requirements for these pairs are: |
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| Currency Pair: |
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Leverage: |
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Margin %: |
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Margin in $ terms: |
| USD/MXN |
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20:1 |
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5% |
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$5,000 |
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| Is there a debit balance risk? Can I lose more money than I deposit? |
Not with FXCM. We guarantee you can never pay a debit balance.
One of the greatest concerns traders have about leverage is that a sizable loss could result in owing money to their broker. At FXCM, your maximum risk of loss is limited by the amount in your
account. All accounts are tracked by our "Margin Watcher," the ultimate safety feature. It may automatically remove your positions from the market before your account could go negative. |
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| How do I track my margin? |
| The FXCM Trading Station tracks your margin in real time, constantly updating you to your position and risk level. You can monitor your margin in the Accounts window, typically found in the top right corner of the Trading Station. |
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| In this window, you will see your Used Margin (Usd Mr) and Usable Margin (Usbl Mr) which, added together, equal your Equity. Used Margin is the amount of money you need to put down as a deposit to hold your trade. Therefore, if your account is set to 100:1 leverage, you will need to set aside 1% of your trade size as margin.
Your Usable Margin is the amount of money left in your account that is available to open additional positions or to absorb any losses, and it fluctuates with your account's Equity. If your Usable Margin ever falls to zero, you won't have enough money in your account to maintain your trades. The Margin Watcher will issue a Margin Call, which may close all open trades at the best available price. This automatic feature from FXCM guarantees that your maximum
possible risk is your account equity. |
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