Margin Policy

Margin Policy

Margin Policy

1. Introduction

This Margin Policy outlines the principles and procedures governing margin requirements, margin calls, and stop-out levels for trading accounts. Margin trading allows traders to leverage their capital, increasing both potential profits and risks. It is the responsibility of traders to maintain sufficient margin levels to support their open positions and manage their trading risks effectively.

2. Margin Calculation

Margin represents the amount of equity required to open and maintain a trading position. The margin is calculated using the following formula:

Margin = (Contract Size * Lot Size * Open Price) / Leverage

For example, if a trader opens a 1 Lot position (100,000 units) in EUR/USD at an opening price of 1.1200 with a leverage of 1:100, the margin required would be:

Margin = (100,000 * 1 * 1.1200) / 100 = 1,120 USD

Different instruments may have varying margin requirements based on market conditions, asset volatility, and regulatory requirements.

3. Free Margin and Margin Level

• Free Margin: The difference between the trader’s account equity and the used margin. This determines the trader’s ability to open new positions.
• Margin Level: The ratio of account equity to used margin, expressed as a percentage.

Margin Level = (Equity / Margin) * 100

A Margin Level below 100% restricts the trader from opening new positions. If the Margin Level drops to the Stop-Out Level, the system will automatically close positions to prevent further losses.

4. Margin Call and Stop-Out Levels

To ensure traders manage their risk effectively, the following levels apply:

• Margin Call Level: 100% of the required margin. When a trader’s equity falls to or below this level, they are advised to take action by either adding funds or reducing their open positions.
• Stop-Out Level: 20% of the required margin. If the Margin Level reaches this threshold, the system will automatically start closing positions, beginning with those incurring the highest losses, until the Margin Level rises above the Stop-Out Level.

5. Examples of Margin Application (All examples assume the account currency is USD)

Example 1: Leverage 1:100

• Trader deposits $10,000 with a leverage of 1:100, allowing a maximum position size of $1,000,000 (10 Lots).
• Opens a 5 Lot Buy position in EUR/USD at 1.1200.

Margin Policy

• Volume: (500,000 EUR * 1.1200) = 560,000 USD
  • Margin: 560,000 / 100 = 5,600 USD
  • Free Margin: 10,000 - 5,600 = 4,400 USD
  • Margin Level: (10,000 / 5,600) * 100 = 178.57%

If EUR/USD rises to 1.1350:

• Profit: (500,000 * 1.1350) - 560,000 = 7,500 USD
• Free Margin: 17,500 - 5,600 = 11,900 USD
• Margin Level: (17,500 / 5,600) * 100 = 312.5%

If EUR/USD falls to 1.1010:

• Loss: 560,000 - (500,000 * 1.1010) = -9,500 USD
• Margin Level: (500 / 5,600) * 100 = 8.9% (Below Stop-Out Level, position automatically closed)

Example 2: Leverage 1:300

• Trader deposits $10,000 with a leverage of 1:300, allowing a maximum position size of $3,000,000 (30 Lots).
• Opens a 20 Lot Buy position in EUR/USD at 1.1200.
  • Volume: (2,000,000 EUR * 1.1200) = 2,240,000 USD
  • Margin: 2,240,000 / 300 = 7,467 USD
  • Free Margin: 10,000 - 7,467 = 2,533 USD
  • Margin Level: (10,000 / 7,467) * 100 = 133.92%

If EUR/USD rises to 1.1350:

• Profit: (2,000,000 * 1.1350) - 2,240,000 = 30,000 USD
• Free Margin: 40,000 - 7,467 = 32,533 USD
• Margin Level: (40,000 / 7,467) * 100 = 536.69%

If EUR/USD falls to 1.1155:

• Loss: 2,240,000 - (2,000,000 * 1.1155) = -9,000 USD
• Margin Level: (500 / 7,467) * 100 = 13.39% (Below Stop-Out Level, position automatically closed)

6. Account Types and Margin Requirements

Account Type Margin Call Level Stop-Out Level

Standard 100% 20% – 100%

Zero Spread 100% 20% – 100% Margin Policy

7. Hedged Margin Calculation

The Company applies differentiated hedged margin calculation rules depending on the asset class of the traded instrument. Hedged margin refers to the margin required when opposing positions (buy and sell) are held simultaneously on the same symbol.

7.1. Precious Metals (XAUUSD, XAGUSD)

For Gold (XAUUSD) and Silver (XAGUSD), the hedged margin multiplier is set to 1.

When a position is fully hedged (equal buy and sell volume), margin is calculated using the following formula:

Hedged Margin = Hedged Margin Multiplier × Open Price × Lots ÷ Leverage

Example:

• Symbol: XAUUSD
• Hedged Margin Multiplier: 1
• Open Price: 4,827.30
• Volume: 1.00 lot
• Leverage: 1:1000

Resulting hedged margin: 1 × 4,827.30 × 1 ÷ 1000 = 4.83 USD

7.2. Forex Currency Pairs

For Forex currency pairs, the hedged margin multiplier is set to 100.

When positions are fully hedged, margin is calculated as follows:

Hedged Margin = Hedged Margin Multiplier × Lots ÷ Leverage

Example:

• Symbol: USDJPY
• Hedged Margin Multiplier: 100
• Volume: 1.00 lot
• Leverage: 1:1000

Resulting hedged margin: 100 × 1 ÷ 1000 = 0.10 USD

7.3. Other CFDs (Indices, Cryptocurrencies, Energy, etc.)

For all other CFD instruments, the Company applies a “larger leg margin” methodology.

In the case of hedged positions, margin is calculated based on the position with the greater margin requirement, using the standard margin formula:

Margin = Open Price × Lots ÷ Leverage Margin Policy Example (Cryptocurrency CFD):

• Symbol: BTCUSD
• Buy Position: 1.00 lot at 90,116.43
• Sell Position: 1.00 lot at 90,072.11
• Leverage: 1:200

Margin applied (based on larger leg): 90,116.43 × 1 ÷ 200 = 450.58 USD

8. Risk Management Considerations

• Leverage Impact: Higher leverage amplifies both gains and losses. Traders should carefully assess their risk tolerance and avoid over-leveraging.
• Market Volatility: Sudden price movements can trigger margin calls or stop-outs. Setting appropriate stop-loss orders can help mitigate risk.
• Diversification: Traders should consider diversifying their positions across multiple instruments to reduce exposure to market fluctuations.
• Continuous Monitoring: Regularly monitoring open positions and margin levels is essential to avoid forced liquidations.

9. Broker Rights and Trader Responsibilities

• The broker reserves the right to modify margin requirements based on market conditions, economic events, and regulatory updates.
• The broker is not obligated to provide prior notice of margin calls.
• Traders are responsible for maintaining sufficient funds in their accounts to support open positions and prevent liquidation.
• The broker may implement additional risk controls to protect traders from excessive losses.

10. Conclusion

Trading on margin involves significant risks and may not be suitable for all traders. It is essential for clients to have a clear understanding of margin requirements, leverage effects, hedged and unhedged margin methodologies, and prevailing market conditions before engaging in leveraged trading.

Hedged margin requirements may differ significantly from standard unhedged margin calculations, and if one leg of a hedged position is closed, margin requirements will immediately revert to the applicable unhedged margin calculation. Clients are solely responsible for maintaining sufficient free margin in their accounts at all times to support open positions and prevent forced liquidation.

By participating in margin trading, clients acknowledge and accept the associated risks and assume full responsibility for their trading decisions. The Company reserves the right to amend margin requirements, including hedged margin calculations, without prior notice in accordance with market conditions, liquidity considerations, and risk management policies.