What's the condition of leverage and margin requirements on XM? Table of Contents
Flexible leverage from 1: 1 to 888:1
At XM clients have the flexibility to trade using the same margin and leverage requirements from 1: 1 to 888: 1.
- Flexible leverage between 1:1 – 888:1
- Negative balance protection
- Real-time monitoring of risk exposure
- No changes in margin overnight or on weekends
Open XM Account and Trade Forex with 1:888 leverage
What is “Margin” on XM?
Margin is the amount of collateral to cover any credit risk that arises during your trading operations.
Margin is expressed as a percentage of the position size (5% or 1%), and the reason for having funds in your trading account is to guarantee sufficient margin.
As an example, a $ 1,000,000 position requires a deposit of $ 10,000.
For forex, gold, and silver, new positions can be opened if the margin requirement for these new positions is equal to or less than the account’s free margin.
When hedging, positions can be opened even when the margin level is below 100% since the margin requirement for hedged positions is zero.
For all other instruments, new positions can be opened if the margin requirement for these new positions is equal to or less than the account’s free margin.
When hedging, the margin requirement for the hedged position is equal to 50%.
New hedged positions can be opened if the final margin requirements are equal to or less than the total capital of the account.
What is “Leverage” on XM?
Using leverage means that you will be able to trade with more funds than you actually have in your trading account.
The amount of leverage is calculated as a ratio, for example, 50: 1, 100: 1, or 500: 1.
Assuming you have $ 1,000 in your trading account, and you trade ticket sizes of $ 500,000 / JPY, your leverage would equal 500: 1.
Can you imagine being able to multiply the funds you have in your trading account by 500 and trade with that large number? With XM you have a short-term credit allowance every time you trade on margin: this allows you to buy an amount that exceeds the value of your account.
Without this credit allowance, you could only buy or sell tickets worth $ 1,000.
XM will monitor the leverage ratio applied to client accounts at all times, and reserves the right to make changes and correct the leverage ratio (for example, by lowering the leverage ratio), at its sole discretion and without notice.
Trade Forex with up to 1:888 leverage on XM
Depending on the type of account you open at XM, you can choose leverage on a scale of 1: 1 up to 888: 1.
Margin requirements do not change during the week, nor do they increase overnight or on weekends.
In addition, at XM you have the option of requesting to increase or decrease your chosen leverage.
For one thing, even if you trade small amounts, if you use leverage, you can make significant profits.
On the other hand, you can also have drastic losses if you do not get adequate risk management.
How does Forex trading work on XM?
Track your Margin Level in real-time
At XM you have the ability to control used and free margin and control your risk exposure in real-time.
The capital of the account is made up of the used and free margin.
Margin used is the amount of money that you must deposit to support the operation (if you choose a leverage of 100: 1, the margin that you must set aside is 1% of the size of the operation).
Free margin is the amount of money that remains in the trading account, and this amount fluctuates according to the capital of your account; you can open additional positions, and absorb losses.
Margin Call on XM platforms
Although each client is responsible for their own account activity, XM follows a margin call policy to ensure that their maximum risk does not exceed their account capital.
As soon as the capital in your account falls below 50% of the margin necessary to maintain your open positions, you will be notified that you do not have sufficient funds in your account to support open positions.
Stop-out level on XM platforms
The stop-out level refers to the capital level at which your open positions are automatically closed.
The stop-out level in a client’s account is reached when the capital in the trading account equals or falls below 20% of the required margin.
What is Leverage? How does it work?
Please check XM official website or contact the customer support with regard to the latest information and more accurate details.
XM official website is here.
Please click "Introduction of XM", if you want to know the details and the company information of XM.
IronFX
Comment by Diletta
March 26, 2024
Awesome bonuses, good leverage. A few hiccups, but support rocks!