Margin

FX Margin

In the Forex market the term margin is most often referring to the amount of money required to open a leveraged position, or a contract in the market. It may also be used to describe the type of account, i.e. Forex margin account; meaning that an account is being traded on borrowed funds. It is generally safe to assume that all off-exchange retail foreign currency (or Forex) traders are trading within margined accounts. Without leverage, or the ability to trade on borrowed funds, a trader placing a standard lot trade in the market would need to post the full contract value of $100,000 in order to have his or her trade executed. Forex trading with a margined account allows traders to utilize leverage, meaning that the same $100,000 contract can be placed for an amount of margin determined by the set level of leverage. An account at 100:1 leverage would require $1,000 of margin to place a $100,000 trade (Margin = Contract Size/Leverage).

Margin Policy

The minimum Margin Requirement offered by Gold-Forex is 1%. The required margin for all accounts is a percentage of the numerical value of the Base Currency or the first currency in a pair.

  1. Margin Requirements of USD based currency pairs are equal to $1000 per unit. For example: Margin of 1 standard lot of USD/JPY = 1% of $100,000 = $1000.

  2. Margin Requirements for non-USD based currency pairs including cross pairs are equal to 1% x 100,000 base currency x prevailing market rate. For Example: Margin of 1 standard lot of EUR/USD = 1% x 100,000 EUR x 1.4805 = $1,480.5

  1. Margin Requirements for Gold is 2%. For 1 lot Gold = 2% of $100,000 = $2,000.

  1. If maximum leverage is employed, traders must maintain the minimum FX margin requirement on their open positions at all times. It is the customer's responsibility to monitor his/her margin account balance. Gold-4X has the right to liquidate any or all open positions whenever a trader's minimum Forex margin requirement is not maintained. This is an important risk management feature designed to strictly limit trading losses in your account.

  1. The MT4 trading software platform automatically calculates FX margin requirements and checks available funds before allowing a trader to successfully enter a new position. If there are not adequate funds available to enter a new position, traders will receive a "Not Enough Money" message when attempting to place the trade.

Calculating Margin

Margin is calculated 2 ways: Used Margin (Margin) and Free Margin. Used margin (Margin) is the amount of money used to hold open positions. Free margin is the amount of funds available to place additional positions.

Calculating Margin Call

Because institutions are loaning 99% of the value of a contract to a trader, fail-safes have been put in place to help prevent a trader from going into the negative and owing the institution additional funds. This is commonly referred to as a Margin Call, where typically a client is called upon to send additional funds or the position(s) will be closed at market price. At 99% margin level the trader will be subject to a margin call. At 50% a stop out level, the automatic close of all open positions so as to bring the margin level back to a suitable percentage (This is a level set by Gold-4X, other brokers may have margin call levels set differently).

If you have any questions about the margin policy or if you need help in calculating your margin, please do not hesitate to call us or email us at support@gold-4x.com. It is the customer's responsibility to monitor and maintain his/her margin account balances at all times. Gold-4X reserves the right to adjust the per-unit margin requirement at any time. The customers will be informed of margin changes in the trade window. Customers should make all necessary precautions to prevent a margin call if the desire of the customer is to hold onto his/her open position(s). When an account balance is no longer able to cover the minimum margin requirement, all positions will be closed automatically. Clients with open positions are advised to check their margin status constantly via the MT4 trading platform that tracks margin details in real-time on the Account Status Reports and Trade Window.