XTB’s Margin levels and initial deposit requirements

Your margin level is the deposit required to keep the position open. To open and maintain your account, you must have sufficient trading resources to cover the required margin at all times. Free margin represents the amount of capital remaining to open new positions or cover negative price movements in your open trades.

At XTB, they trade with a 30% cap level. The limit level is calculated by dividing your equity by the required margin and then multiplying by 100%.

On XTB’s strading platforms, you will find an indicator called margin level. When this indicator falls below 30%, your open position with the largest loss will be automatically closed as part of an automatic safety mechanism to prevent you from falling into even greater losses. To prevent this, you will need to ensure that your margin level is always greater than 30% by depositing more capital.

Learn more about the pip value and margin here.

Find out more about XTB’s leverage and margin requirement

What is leverage?

Leverage allows you to gain great market accessibility for a relatively small initial deposit. This means that, if the market moves in your favor, your net return may be much higher than in classic trading and your profits more profitable.

On the other hand, if a market moves against you, your losses may exceed your initial deposit, therefore it is of great importance to understand how to manage the level of risk when trading.

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Let’s take a few examples to understand how leverage works.

Example I:

XTB’s first trader wants to open a EUR / USD trade of 0.1 lots.

The value of the contract is € 10,000 and the leverage is 200: 1 or 0.5%.

This means that the investor needs 0.5% of € 10,000, which is € 50, as a deposit to open the trade.

Example II:

XTB’s second trader wants to buy an S & P500 contract with a multiplier of 50.

For the purposes of this exercise, let’s say the price of the S & P500 is 2,000.

To open a position without leverage, the investor will need 2,000 x 50 = $ 100,000 (USD) in his account.

If the leverage is 100: 1, the trader only needs 1% of that to open a position. So with just $ 1,000 as an initial deposit, you will be able to get exposure equal to $ 100,000 on the S & P500.

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What is the advantages of leverage?

  • Leverage allows you to optimize your investment by making it possible to trade long positions by committing only a fraction of the value of the trade as an initial deposit.
  • You can also take larger positions than you could with physical purchases.
  • Your return is much higher as a proportion of initial investment.
  • Optimize your capital by investing in a range of different assets.

What’s the relation of Leverage, Margin and Margin Call?

What is the risks of leverage?

As your profits increase, so do your potential losses. You can lose more than your initial deposit if you don’t handle risk carefully.

If you have a basic account you can minimize your risk by using the guaranteed stop loss. When available, it will limit your potential losses to a certain amount.

See also – What’s the condition of margin and leverage on XTB xStation and MT4?

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