What's the condition of Margin/Leverage of FXCM UK?

Leverage and Margin on FXCM’s platforms

You can trade on Forex and leveraged CFDs.

This allows you to take advantage of even the smallest movements in the market.

When trading with FXCM, your trades are executed using borrowed money.

For example, 30: 1 leverage on a major currency pair, such as EUR / USD, allows you to trade € 10,000 on the market while setting aside only € 333 as an escrow.

FXCM UK offers different leverage for different tradable instruments.

• 30: 1 leverage for major currency pairs
• 20: 1 for non-major currency pairs, gold and major indices
• 10: 1 for commodities other than gold and non-major equity indices
• 2: 1 for cryptocurrencies
• 5: 1 for individual shares and other reference values

In addition to the above leverage requirements, FXCM EU has established a negative balance protection policy which, in the event that a negative balance occurs in a clients’ trading account due to extremely volatile market conditions and/or stop out, an adjustment will be made for the full negative amount.

This means that retail clients will never lose more than the total funds deposited in their trading account.

Professional clients are not entitled to negative balance protection.

Additionally, considering the level of risk and complex nature of CFD trading, FXCM EU offers no incentive to encourage retail clients to trade.

What is Margin and Leverage?

What is the Margin?

Margin can be viewed as a bona fide deposit required to maintain open positions.

This is not a cost or a transaction cost, it is simply a portion of the equity set aside and allocated as a margin deposit.

Margin requirements (per 1k lot for FX and 1 contract for CFD) are determined by taking a percentage of the notional trade size plus a small buffer.

The buffer is added to help smooth out daily / weekly fluctuations.

FXCM accounts use a tiered margin system which consists of an entry/maintenance margin and a clearance margin.

Entry / Holding Margin

The bona fide initial deposit or collateral set aside to open or hold a position. On the Trading Station platform, the exact amount of margin required to open a position can be seen in the “MMR” column of the “Simple Price View” window or in the “M holding used” column of the “Accounts” window.

Liquidation Margin (Minimum Required Margin)

Generally, 50% of the Entry Margin, if the equity of your account falls below this level, all positions will be closed.

How to start using FXCM Trading Station?

How margin requirements change on FXCM

Margin requirements may change periodically due to changes in market volatility and exchange rates.

For example, the margin requirement (MMR) for a specific currency pair is calculated as a percentage of that pair’s notional value.

As the exchange rates for any specific currency pair fluctuate up or down, the margin requirement for that pair needs to be adjusted.

For example, if the euro strengthens against the US dollar, more margin will be required to hold a EUR / USD position in a US dollar-denominated account.

FXCM does not expect more than one update per month, however, extreme market movements or the risk of events may require unscheduled intra-monthly updates.

The Trading Station Tiered Margin consists of two components:

Initial Entry / Hold Margin

The bona fide initial deposit or collateral set aside to open and then hold a position. The exact amount of margin required to open a position can be viewed in the “MMR” column under the “Simple Price View” window on the trading Station platform or in the “M holding used” column in the “Account” window.

Liquidation Margin (Minimum Required Margin)

The minimum amount of equity must be present in the account in order to continue to hold current open positions on the account. This is set at 50% of the maintenance margin value. If the equity falls below this level, all positions will be automatically closed. The exact amount of margin required before automatic settlement occurs can be found in the “Hold M Used” column in the “Account” window.

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Tiered Margin System on FXCM MetaTrader4

Similar to Trading Station accounts, MetaTrader4 (MT4) accounts are preset to a tiered margin system.

MT4 accounts do not use the Smart margin system, but use a different version of FXCM’s tiered margins and margin call procedures.

MT4’s tiered margin system is designed to allow clients more time to manage their positions before the automatic liquidation of their positions takes place.

Clients are able to see real-time updates of their margin status on the MT4 platform.

The MT4 platform does not allow FXCM to include fees in pre-trade margin calculations on client pending orders.

This means that if you place a trade with a small amount of usable margin available in your MT4 account, there is a risk that the execution of the orders may trigger a margin call immediately after execution, as commissions can result in the insufficient margin to keep your positions open.

You should therefore make sure that you have reserved sufficient usable margin before opening new trades.

The MT4 tiered margin system consists of two components:

Initial Entry / Hold Margin

The bona fide initial deposit or collateral set aside to open and then hold a position. The exact amount of margin required to open a position can be viewed in the “MMR” column under the “Simple Price View” tab on the MT4 platform prior to execution.

Liquidation Margin (Minimum Required Margin)

The minimum amount of equity must be present in the account in order to continue to hold current open positions on the account. This is set at 50% of the maintenance margin value and an automatic liquidation will occur when the “Margin Level” of the “Open Positions” window on the MT4 platform reads “50%” or lower.

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