Leverage and margin requirements

Want to know everything about our leverage and margin requirements? In this article you will learn about:

• What is leverage?
• Unlimited Leverage
• Leverage requirements
• Dynamic margin requirements
• Fixed margin requirements
• High margin requirements (HMR)
  • Instruments with dynamic margin requirements
    • Market closure and reopening
    • News releases
  • Instruments with fixed margin requirements
• How to calculate margin

 What is leverage?

Leverage magnifies a trader’s buying power by giving them the ability to trade large volumes even with a small amount of deposited funds. It is expressed as a ratio of the trader’s own funds to borrowed funds, e.g. 1:200, 1:2000 or 1:Unlimited.

The amount of leverage varies as it depends on your account equity and other factors outlined below. Follow the link for more on how to change your leverage.

Unlimited leverage

Unlimited leverage allows you to trade with negligible margin, thereby allowing you to open bigger positions and try different strategies. It is available on our Standard, Standard Cent, Standard Plus, Pro, Raw Spread and Zero accounts.

Unlimited Leverage is more suitable for experienced traders as it carries higher risks and may lead to greater loss of capital. To make Unlimited Leverage available, we have the following prerequisites and conditions:

• The trading account must have equity of less than USD 1 000.
• The trader must have closed at least 10 positions (excluding pending orders) and 5 lots (or 500 cent lots) across all real accounts in your Personal Area.

You can select Unlimited Leverage in your Personal Area. However, the Unlimited Leverage option will only be unlocked when all the prerequisites are met.

Leverage requirements

Whenever you have Unlimited Leverage selected, your maximum available leverage will automatically change to when your account's equity exceeds a certain amount. Below is a handy table outlining these levels of leverage requirements, and how much equity triggers them:

Read our Leverage and margin requirements rules for more information.

Please note that Unlimited Leverage is not available for financial instruments belonging to Exotic, Cryptocurrencies, Energies, Stocks and Indices instrument groups. The margin for these instruments is held in accordance with the instruments’ fixed margin requirements and is not affected by Unlimited Leverage.

Follow either link for more on the classification of trading instruments or for our Contract Specifications.

Dynamic margin requirements

For the majority of the trading instruments, margin requirements are dynamic, meaning that they change once the leverage changes—the bigger the leverage, the smaller the margin requirements, and vice versa. Factors such as publication of important economic news, and trading before weekends and holidays can also affect margin requirements.

For instruments with dynamic margin requirements, leverage automatically changes in these scenarios:

• When your account equity changes
• During the publication of important economic news
• Before weekends and holidays

Verify the margin requirements for your instrument for yourself with the help of our Trader’s Calculator. You can also read more about Margin Requirements and Leverage Rules on our website.

Fixed margin requirements

Margin requirements for some instruments are fixed, regardless of the level of leverage you use. Do note that regardless, instruments are always subject to higher margin requirement rules.

These financial instruments include the groups:

• Exotic
• Cryptocurrency
• Energies
• Stocks
• Indices

The margin for these instruments is held in accordance with the instruments’ margin requirements and is not affected by Unlimited Leverage. 

High margin requirements (HMR)

Instruments with dynamic margin requirements

There are two instances when high margin requirement (maximum leverage of 1:200) is applied to newly opened positions or positions reopened as a result of other closed positions:

• News releases
• Market closure and reopening

Market closure and reopening

Before the market closes for the weekend and right after the market reopens after the weekend, margin requirements for new positions are calculated based on a maximum leverage of 1:200.

This rule is applicable 3 hours before the market closes and 1 hour after market reopens.

News releases

When important news involves a trading instrument, orders opened 15 minutes before the news release and 5 minutes after will have margin held at a maximum leverage of 1:200.

This measure reduces a traders' risks of price instability during significant economic events.

5 minutes after the news release, the leverage restrictions are lifted and margin is recalculated based on the equity of the trading account and its set leverage.

Instruments with fixed margin requirements

Here is a list of cases when the HMR is applicable for instruments with fixed margin requirements:

1. For Stocks,

1. 1. 1. High margin requirement of 20% is applicable 6 trading hours before and lasts until 20 minutes after the publishing of its company financial report. Here is a link to the Stock announcement dates.
      2. HMR of 20% for stocks is also applicable 15 minutes before market closing time up until 20 minutes after the market reopens.

2. Energies like UK Oil and US Oil have an increased margin requirement of 5% (maximum leverage 1:20) both during market closure and during news releases.

1. 1. 1. USOil - Starts 5 hours prior to the market closure on Friday and ends 49 mins after the market opening
      2. UKOil - Starts 9 hours prior to the market closure on Friday and ends 20 mins after the market opening

3. All orders placed on Gold within 30 minutes of the daily break are subject to increased margin requirements, with leverage restricted to 1:1000 or less.
4. Indices have HMR everyday which varies for each index. You may read up in detail here in our article about Indices.

How to calculate margin

Whenever you want to place a trade, it is extremely important to make sure that you have sufficient funds in your account to open the position and keep it open. We covered this in an article about how to start trading.

So, how do you calculate margin?

Keep in mind that margin is calculated differently for different trading instruments. As such, for the majority of trading instruments we offer at Exness, the margin is calculated according to the leverage you are using. However, there are some instruments for which margin requirements are fixed, regardless of the leverage you use.

Margin requirements that depend on leverage

Margin = Lots x Contract Size / Leverage Size

Let’s take 2 lots of EURUSD as an example, with leverage of 1:2000.

• Lots: 2
• Contract size: 100 000 EUR
• Leverage size: 2000

Margin = 2 x 100 000 / 2 000 = 100 EUR (margin is always calculated in the base currency).

Margin requirements that do not depend on leverage

Margin = Lots x Contract size x Required margin

Let’s use 0.5 lots GBPSEKm.

• Lots: 0.5
• Contract size: 100 000 GBP
• Required margin: you can find this in our Contract specifications. In this example the required margin is 1%

So,

Margin = 0.5 x 100 000 x 0.01 = 500 GBP

It’s always good to know the ins and outs of how things are calculated, but what could be better than a tool that can calculate it for you in a second? Whenever you need to calculate margin and other related figures, just use the Trader’s Calculator.