Leverage and Margin

Various choices of leverage with the Maximum of 1000:1

You may choose your preferable leverage depending on your trading strategy from the Discovery-FX’s wide variety of leverage from 1:1 to 1000:1.

What’s the Margin?

Margin plays an important role as collateral and security against losses incurred during your trading. Margin ratio is expressed as a percentage of your position size, such as 5% or 1% etc. For example, 1% margin ratio for 1 million USD position requires 10,000 USD as your required margin. The smaller the margin ratio, the greater the sensitivity to the market fluctuation and your profit (or your loss). Therefore, purpose for maintaining enough money in your trading account is for securing your margin which allow you to continuously trade.

What’s the Leverage?

In the margined FX/CFD market, “leverage” is a common scheme for traders who invest in fluctuations of underlying markets. It is said that the greatest advantage of deploying the leverage scheme exist in FX markets. By adopting the leverage scheme, traders can hold their positions more than the actual account balances. Leverage is typically expressed as ratio such as 50:1,100:1 or 500:1 and so on. Supposing that you hold 1,000 USD deposit in your trading account, and you can hold 500,000 US Dollar position, this means that the leverage of your trading account is set as 500:1. But how could it be possible? Because we provide you short-term settlement funds. This allows you to trade FX/CFD which amount exceeds your account balance. Without the leverage scheme, you only can trade up to 1,000 US Dollars.

Various choices of leverage with the Maximum of 1000:1

You may choose your preferable leverage depending on your trading strategy from the Discovery-FX’s wide variety of leverage from 1:1 to 1000:1.

Risk of Losing Money Sharper and Quicker

By deploying leveraging scheme, there might be possibility that you can earn larger profits from relatively smaller initial positions. On the other hand, lack of appropriate risk management might increase probability of losses much more than you expect. We strongly recommend that you will select lower leverage out of the Discovery FX’s variety of leveraging scheme depending on your experience and wealthiness. As a guidance, we do not recommend you deploying 300:1 or higher because its speed of losing money would be relatively sharper and quicker. Higher leverage can increase probability of both great profits and losses. Therefore, you please kindly consider your circumstances and set an appropriate level of risk appetite and tolerance. To protect you from making negative balance in your account, we shall limit your maximum losses to your account balance at the time. In another words, you will not lose much more than your account equity even if your loss exceeded it and went negative equity.

Margin and Fund Management

In your trading accounts, you can see your account balance, total equity, your used margin, and available margin at real-time basis so that you can monitor and control your risk at any time and from anywhere. Your account balance consists of cumulative deposit, withdrawal, realised profits and losses, and rolling costs and fees. Your account equity consists of your account balance and unrealised profit and loss. The used margin is an amount held as collateral which you are required to maintain when you hold a position. For example, if your account leverage is 100:1, you will be required to maintain 1% of your new position in your account. Available margin is an unused balance in your account equity which allows you to take an additional position or absorb losses from the existing positions. Available margin is changing at a real-time basis when you hold positions.

Margin call

While you are fully responsible for monitoring and controlling your own trading account, Discovery FX would follow our margin call procedure for mitigating risks that you might be falling negative equity. When unrealised loss falls below 50% of the account equity, we will alert you so and warn you to put more attention to sending additional margin to maintain the position or reducing positions.

Loss Cut

Loss cut level is a level where unrealised loss reached 80% of the account equity in your trading account. As soon as this point is hit, all the open position will be automatically closed at available market prices.

*Please refer to the client agreements and relevant documents for further information of the leverage and margin specifications.