Margins and Leverage

ActivTrades offers currency trading with high leverage. You always have control of your appropriate level of risk, the leverage we offer serves as a maximum.

Please note:

1. With leverage, you can capture higher returns for smaller market movements. It increases your buying power because you need less capital to trade. Thus, increasing leverage increases risk. The high degree of leverage available may as well work against you. Before deciding to invest in Forex you should carefully consider your investment objectives, level of experience and your capability to take risk.
2. If during an open trade, the net worth of the account reaches the "trade-out level" of the required margins, positions in excess would be automatically closed. Please note that in the case of a trade-out the most unprofitable position will be closed first.
3. The following currency pairs will be subject to a greater margin requirement: EURDKK, EURTRY, GBPTRY, TRYGPY, USDTRY, USDZAR. The permitted leverage will be 1/5th of the above table. For example, an account with leverage of 100:1 will provide 20:1 leverage on the noted currency pairs.

Example of a Leveraged Trade

You have €10,000 equity in your trading account and you anticipate the EUR will depreciate against the USD. To reflect this opinion you need to open a trade where you sell EUR against USD, the current quote is 1.4848/1.4850. You consider that you are fairly confident in this prediction and will use a trade amount of 1 Lot (€100,000) and so you Sell 1 Lot EURUSD at the bid price of 1.4848. The maximum permitted leverage for your account value is 1:200, or expressed as margin is 0.25%. The margin requirement for the trade is therefore €500.

Later in the day and as you predicted, the EURUSD price falls to 1.4798/1.4800 and to close the position you Buy back 1 lot EURUSD at 1.4800. The trade has made a profit of 48 pips, that’s $480 or €324.30.

In this case the leveraged investment of €500 returned a profit of €324.30, that’s 64.80%.

Example of an Automatic Tradeout

You have €10,000 equity in your trading account and an open short EUR position against the USD of 20 lots (€2,000,000) at 1.4848. The Tradeout level of your account is set by ActivTrades as 30% and your maximum permissible leverage at 1:200. Therefore your margin requirement for this trade is the full €10,000 of your equity.

The market unfortunately rises to 1.4898/1.4900, at this level your position is losing $10,400 (52 pips X $200 pip value) or €6,979.90. Your free equity now stands at €3,020.10. If the market rises one more pip to 1.4899/1.4901 then your losses would increase to €7,113.60 and your balance decrease to €2,886.40. At this point you no longer hold the minimum of 30% equity of your margin requirement and your position is closed out at 1.4901. Your remaining equity balance falls to €2,886.40.

You balance must always be at least 30% of the margin requirement for open positions or your trades will be closed in order of the greatest loss first.