Margin & Leverage

Margin & Leverage are tools that allow traders to optimise their trading positions and increase potential gains

Indicative Margins

Instrument Leverage Up To
Forex (Majors) 1:500
Forex (Minors) 1:500
Forex (Emerging) 1:500
Commodities 1:100
Indices 1:100
Foreign Currency pairs

Forex trading is executed in currency pairs, classified into the following groups:

Major: The most frequently traded currency pairs, consisting of the US Dollar as the base or the counter currency. Examples include EUR/USD, GBP/USD and USD/CAD.

Minor: The currency pairs which do not consist of the US Dollar. Examples include EUR/GBP, EUR/JPY and GBP/CHF.

Emerging: The exotic currency pairs, consisting of a major currency and the currency of an emerging yet strong economy. Examples include EUR/NOK (Norwegian Krone), USD/CZK (Czech Koruna) and EUR/HUF (Hungarian Forint).

What is Leverage?

Leverage is the investment strategy of using borrowed money to increase the potential return of an investment. In simpler terms, it gives you the ability to control a large amount of money using very little of your own, while we cover the rest. For example, to control a $500,000 position, we will set aside $1,000 from your account. Your leverage, expressed in ratios, is now 1:500, where every 1 dollar you have has the buying power of $500. In essence, you are trading half a million dollars with only one thousand dollars, and your return will be on the $500,000. Leverage can help magnify your returns, which is great news if the market moves in the direction that you expect. However, the risk with leverage is that it can magnify your losses in precisely the same way as your gains.

What is Margin?

In the leverage example, the $1,000 deposit is “margin” you must give in order to use leverage. Margin is the amount of money required from you in order to place a trade and maintain that position. It is expressed as a given percentage of your Net Equity (current account balance and unrealized Profit & Loss) and any possible applicable commission and/or any spread charges. Margin is not a fee. The amount is deducted from your account and returned when the position is closed. The total amount held to maintain all your current open positions is called “used margin”. The remaining balance in your account available to open new positions is your free margin.

Margin & Leverage

M4Markets offers flexible leverage up to 1:500 on selected products and accounts. It is very important to understand how leverage and margins work since they are dynamic and will reflect the amount of equity, at every period of the year, i.e. holidays, economic news etc.

Margin & Leverage

FOREX PAIRS MARGIN REQUIREMENTS % MAXIMUM LEVERAGE
ALL 0.2 1:500
COMMODITIES MARGIN REQUIREMENTS % MAXIMUM LEVERAGE
ALL 1.0% 1:100
INDICES MARGIN REQUIREMENTS % MAXIMUM LEVERAGE
ALL 1.0% 1:100

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