WHAT ARE THEY?
How do they work?
Let’s take the following example:
You have a trading account with myFXplan with a balance of $10,000.
If you have an account leverage of 1:1 and wish to use $1,000 on one single transaction as the margin, then you will have exposure of $1,000 in base currency ($1,000) = 1 x $1,000 = $1,000 (trade value). Meanwhile, if you have an account leverage of 100:1 and wish to use the same amount of margin on a single transaction ($1,000), then you will have exposure of $100,000 in base currency ($1,000) = 100 x $1,000 = $100,000 (trade value).
The concept here is that you have been temporarily given the necessary credit to open the transaction that you are interested in making. Without this margin, you would only be able to buy or sell transactions of $1,000 at a time.
Thus, the margin requirements will vary depending on your leverage ratio, or in other terms, a higher leverage equals to a lower margin requirement.
Your trading style will greatly dictate your use of leverage and margin.
It is imperative to understand that trading with leverage can affect your trading experience both positively and negatively as both profits and losses are dramatically amplified.
Trading with higher leverage ratios may not be suitable for all type of traders and may be too risky for some.
In order to help traders in minimising their risks, we have specific leverage restrictions in place (see table).
To see how much leverage you can use on your trading account, please refer to the information. It is there to guide you on the available leverage options.
|Available Leverage||Min. Account Equity||Max. Account Equity|