Want to know everything about our leverage and margin requirements? Read on to learn about:
- What leverage is
- Unlimited leverage
- Dynamic margin requirements
- Fixed margin requirements
- How to calculate margin
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 maximum leverage you can use when trading the majority of forex currency pairs depends on your account type:
- For Cent, Mini, and Classic accounts: 1:Unlimited
- For ECN accounts: 1:200
The amount of leverage varies as it depends on your account equity and other factors outlined below. You can cap the maximum leverage for your account in the Settings section of your Personal Area.
Unlimited leverage allows you to trade with negligible margin, thereby allowing you to open bigger positions and try different strategies. The actual leverage of Unlimited Leverage is 1:2,100,000,000. It is available on our Cent, Mini, and Classic accounts.
Unlimited Leverage is more suitable for experienced traders as it carries high risks and may lead to loss of capital. To make Unlimited Leverage safer, we have put in place 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 his/ her 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.
If you have selected Unlimited Leverage, your maximum available leverage will automatically be changed to 1:2000 when your account's equity exceeds USD 1,000.
There are also other factors that can affect the margin requirements, such as publication of important economic news, and trading before weekends and holidays. Read our Leverage and margin requirements rules for more information.
Please note that there are financial instruments, such as specific currency pairs, for which Unlimited Leverage is not available. These currency pairs are denoted with a yellow bar on the left of the symbol in Contract specifications. The margins for these currency pairs are in accordance with the pairs' margin requirements and are not affected by Unlimited Leverage.
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. You can check it for yourself with the help of our Trader’s calculator.
Leverage automatically changes in these scenarios:
- When your account equity changes
- During the publication of important economic news
- Before weekends and holidays
- Thirty minutes before the daily market break (for Gold trading)
You can read more about this on the Margin Requirements and Leverage Rules page on our website.
Margin requirements for some instruments are fixed, regardless of the level of leverage you use. These are called exotic currency pairs and are highlighted with a yellow bar in our Contract specifications.
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 one of our other articles.
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: That’s simple - 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%
Margin = 0.5 x 100,000 x 1% = 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? That’s where our smart Trader’s calculator comes in handy. Whenever you need to calculate margin and other related figures, just use the Trader’s calculator.