What is Leverage and Margin?

Leverage

Leverage is used to increase your position size by ‘borrowing’ funds from your broker. This gives you more flexibility with lower initial capital, enabling you to trade larger volumes. The broker essentially provides the trader with the extra capital required for the larger position, increasing the magnitude of potential gains or losses.

Margin

Margin can be thought of as a good faith deposit or collateral that’s needed to open a position and keep it open. It's used to maintain positions that are open in a market and allow clients to enter into positions. Margin is usually expressed as a percentage of the full amount of the position. For example, different markets will require different amounts of margin for positions in that market to be opened and maintained.

To see the margin rates offered for our markets, please click on the "Market Information Sheet" under the 'Markets' tab on our website, as shown below:

Can I see how much margin is required to enter a position?

Yes, you can! You can view the margin requirement for your entire account or the margin requirement for your individual trades via the Market Explorer screen as shown below:

• Current Margin: This shows the entire margin that is required to keep your current position(s) open. Your account balance will also include the current margin, as technically the funds are still yours but you can't withdraw these funds until you've closed your open position(s) and realised any profits or losses.

• Estimated Margin: This shows the margin required for each individual position. This will differ depending on the market, the open price, and the stake size of the position.

  Note: The Current Margin is a sum of all of your open positions. So all of the estimated margin amounts combined = current margin.

Can I see how much margin is required for my open position(s) on the platform?

You can. This can be done by opening a deal ticket and specifying a stake. Once the stake size has been specified, the 'Est. Margin:' will show the amount of margin required to enter into the position as shown below:

The calculation for finding out the margin on our Cloud Trade platform is:       

Stake Size       X       Market Price       X       Margin Requirement.

Can I see what my current margin percentage is?

You can view your current position funded % in the Account Summary tab of your platform, as such:

Note that we'll send out margin call alert emails at 100% and the stop-out-level is set to 50%.