MARGIN REQUIREMENTS

 

Please refer to our Trading Conditions to learn about Forex and CFD Margin Requirements.

Customer must maintain the Minimum Margin Requirement on their Open Positions at all times.

Marketsforu has the right to liquidate any or all Open Positions if the Minimum Margin Requirement is not maintained.

Margin requirements are subject to change at any time. In order to prevent any confusion, Marketsforu will, on a best efforts basis, inform traders of any coming changes on Margin Requirements by email at least a week before changes are implemented.

 

MARGIN REQUIREMENT LEVELS

Margin requirements are calculated by dividing the market value of a position by the maximum leverage allowed for that trading instrument.

 
Example:

The trader opens a position of 0.35 Lot on EUR/USD with the market at 1.4000 in an account denominated in USD. Maximum leverage on this example account is 1:100.

The base currency is EUR (since it's on the left) in this example. Since 1.00 Standard Lot is equal to 100,000 units of the base currency:

Trade Size: 0.35 x 100,000 = 35,000

So this trade involves 35,000 units of Euros.

In order to find the account currency value of the position, we can simply multiply the current price by the trade size in this case since the quote currency (on the right) happens to match the EUR/USD pair's quote currency: USD.

Position Value: 35,000 x 1.4000 = 49,000 USD

The margin requirement can then be found by dividing the Position Value by the Maximum Leverage:

Margin Requirement: 49,000 / 100 = $490

So the required margin to open a 0.39 Lot Trade on EUR/USD at 1.4000 in a USD-denominated account with a 1:100 maximum leverage is $490 USD.

In more complex scenarios, the quote currency of the currency pair may not match the account's denomination currency. This simply requires converting the Position Value in terms of the quote currency into the account currency.

For example: If the pair in question is GBP/JPY and your account is denominated in EUR, you'll need to first complete the above steps up until position value (which would initially be in terms of JPY since JPY is the quote currency), then take that position value and multiply it by the inverse of EUR/JPY (the inverse being one divided by price of EUR/JPY, since EUR is the base currency and not the quote currency in the pair with JPY) to find the value of the position in terms of EUR.

The trading platform will do all of these calculations automatically in realtime and display your current margin used so learning to do these calculations is not a practical requirement for trading.

However, if it helps to understand the approximate balance needed to trade a particular size, it may be worth learning the logic of the above examples. 

 

MARGIN CALLS

Customers will be warned by the trading platform that they are getting close to automatic liquidation. Customers will only get an automatic margin call notification if they are logged into their trading platform. Therefore, customers are advised to log into their trading platform on a regular basis to ensure they monitor their Equity and any relevant notifications accordingly. Marketsforu may optionally alert traders by phone-call and/or by email that they are getting close to automatic trade liquidation of their positions. The trader will be advised to deposit additional funds into their account or instructed to reduce/close out current open positions.

Traders are also warned that the moment their margin level falls below the Margin Stop-Out level, the platform will automatically liquidate their positions. This will be done without further reference to the Customer. Once an account reaches a Margin Call warning level, it is possible that the margin level could increase above 100%. Should this happen the Margin Call process will reset. If the Margin Call Warning levels are reached again, the Margin Call process will start again. Closure of positions will be done on the basis of best execution prices available to Marketsforu at that time.
 
Traders are responsible for placing their own Stop Loss Orders to minimize losses.
 
In addition, Marketsforu may, from time to time and at our best effort, contact the trader and request that additional collateral to secure trader's obligations if positions violate margin minimums. Any call for additional margin shall not be deemed precedent for future calls nor future waiver of liquidation rights by Marketsforu.

 

As of this writing, Margin Calls will be issued at 50% of Margin Requirements, and automatic liquidation will execute at 30% of Margin Requirement. These values may vary across different platforms and may change. In either case, traders are strongly encouraged to maintaining a minimum of 100% of Margin Requirement in the account at all times.