MetaFX margin example
FOREX CLUB applies floating leverage based on total position volume to all of its MetaFX accounts. MetaFX accounts with total open positions of less than $5 million carry a maximum leverage of 1:200. This means that the nominal value of a trader’s total open positions at any given time may be up to 200 times greater than his/her current account balance. Accounts with total open positions greater than $5 million carry a maximum leverage of 1:100. Accounts with total open positions greater than $30 million carry a maximum leverage of 1:20. For all MetaFX accounts, the maximum possible leverage is 1:200.
Your account funds are used as the margin for your transactions. Your margin is neither a commission, nor a transaction fee: the money still belongs to you, and you can withdraw it at any time if it is not being used to cover current open positions.
You can specify a transaction amount for the given deposit, which means you can manage your leverage and risks accordingly.
Here is an example of how MetaFX floating leverage works:
1. Position 1. Buy 20 lots of GBPUSD at 1.5860
Nominal value: 20 × 100,000 × 1.5860 = USD 3,172,000
Because the nominal value of USD 3,172,000 does not exceed USD 5,000,000, the margin requirement is calculated using leverage of 1:200.
Margin: 3,172,000/200 = USD 15,860
2. Position 2. Sell 10 lots of EURUSD at 1.3694
Nominal value: 10 × 100,000 × 1.3694 = USD 1,369,400
Total nominal value for Positions 1 and 2:
3,172,000 (Pos. 1) + 1,369,400 (Pos. 2) = USD 4,541,400
Since the total nominal value of the positions does not exceed USD 5,000,000, 1:200 leverage still applies.
Margin: 3,172,000/200 + 1,369,400/200 = USD 22,707
3. Position 3. Buy 10 more lots of GBPUSD at 1.5850
Nominal value: 10 × 100,000 × 1.5850 = USD 1,585,000
Total nominal value for Positions 1, 2 and 3:
3,172,000 (Pos. 1) + 1,369,400 (Pos. 2) + 1,585,000 (Pos. 3) = USD 6,126,400
Now that the total nominal value of the three open positions exceeds USD 5,000,000, the total margin is calculated differently: leverage is 1:200 for the first USD 5,000,000 and 1:100 for the remaining amount (USD 1,126,400).
Total margin:
5,000,000/200 + 1,126,400/100 = USD 36,264
4. Close Position 2 (nominal value of USD 1,369,400). Once the position is closed, the total nominal value for Positions 1 and 3 is:
3,172,000 (Pos. 1) + 1,585,000 (Pos. 3) = USD 4,757,000
Closing Position 2 reduces the total nominal value of the open positions and significantly reduces the required margin by bringing the client’s open positions under the cutoff point beyond which margin requirements increase (remember, positions over USD 5 million are subject to 1:100 leverage).
New margin: 3 172 000/200 + 1 585 000/200 = USD 23,785
1:500 leverage is available to clients who open trading accounts from Mainland China. Please click here to see details.
