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
- 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 amount of leverage varies as it depends on your account equity and other factors outlined below. To find out more about changing your leverage, click here.
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.
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:
|Equity||Maximum available leverage|
|USD 0 - 999||1:Unlimited|
|USD 0 - 4 999||1:2000|
|USD 5 000 - 29 999||1:1000|
|USD 30 000 or more||1:500|
Read our Leverage and margin requirements rules for more information.
Please note that Unlimited Leverage is not available for financial instruments belonging to Exotic, Crypto, 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.
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.
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)
- Stocks are affected 6 trading hours before and 20 minutes after the publishing of its company financial report; follow the link for these Stock announcement dates.
- The daily market closing and opening for Stocks will result in high margin requirements if an order is opened during the period before market closing and after market opening; this is unlike announcements of financial reports, which always result in high margin requirements regardless of when the position was opened.
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:
The margin for these instruments is held in accordance with the instruments’ margin requirements and is not affected by Unlimited Leverage. You can check the list of instruments here or on 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: 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 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.