Please note that you can use leverage to obtain higher returns when market is less fluctuation. Leverage reduces the need for capital to increase purchasing ability. However, increased leverage also increases risks, high leverage may also be unfavorable to your transactions. Before deciding to invest in foreign exchange, be carefully consider your investment objectives, experience and affordability risks.
For open positions, if account equity fell to the margin requirement, your position may be forced liquidated at a loss. Please note that if that happens, the less profitable positions will be forced liquidated.
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.
Please note that for MT4 accounts the required margin for hedged positions is 10%.
The maximum leverage applied to each of the client´s accounts is based on the client´s total equity on all the accounts.
You have $10,000 equity in your trading account and an open short EUR position against the USD of 10 lots ($1,000,000) at 1.1000. The Trade-out level of your account is set by INFINITAS as 10% and your maximum permissible leverage at 1:200. Therefore your margin requirement for this trade is the full $5,000 of your equity.
The market unfortunately rises to 1.1094,
at this level your position is losing $9,400 (94 pips X $100 pip value). Your free equity now stands at $600. If the market rises one more pip to 1.1095 then your losses would increase to $9,500 and your balance decrease to $500. At this point you no longer hold the minimum of 10% equity of your margin requirement and your position is closed out at 1.1095. Your remaining equity balance falls to $500.
At that level, your loss would be $ 9,400 and assets $ 600. The margin level (Equity / Margin Requirement) would be 30%. If the EUR / USD climbed to 1.1095 another basic point, the position will automatically close at 1.1095, as its margin level would be less than 30%. The total loss would be $ 9,500; leaving a balance on account of 600 $.
