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Leverage/Funds/Margin/Availability


Guest CedyB

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When I open my a/c I see something like the following FUNDS £4,549.69. Margin £3,3329.45. Availability £608.32.

My question is what is the LEVERAGE (is it 30 x total funds) and how is the above worked out. I am wanting to test a strategy with no stops so its vital to know how to prepare for a possible spike. In the forum its suggested  that one only uses two thirds of the funds. Things appear so complicated and yet surely there is a simple mathematical solution to prepare for a spike.

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Hi there, thank you for posting your question.

Funds are the funds you have added to your account and they will change when you realize profits and losses. There is also a figure called Equity, this is your funds plus or minus your gains or losses (if you were to close all of your positions, this would be your total value). Margin is the funds that a tied up that allow you to keep your current positions open.  Available, is the spare funds you have at your disposal to open new trades, taking in to account the margin that is being taken up for your current open positions. In other words, your available is your equity minus your margin.

If you have no open positions, your margin should be 0 and your funds, equity and available should equal the same amount.

In regards to leverage, it will depend on the market you are operating and the country you are contracted to. For countries under ESMA, retail clients will have the following leverages: 30:1 on most forex pairs, 20:1 on major indices indices,starting leverage of 5:1 on shares, 20:1 on most commodities and 2:1 on cryptos. To calculate your overall account leverage, you would need to calculate a weighted-average of your positions on each market.

In some countries like Australia, leverage can be up to 200:1.

You can visit the next link to find out more about our different leverage levels:

https://www.ig.com/uk/compare-our-leveraged-trading

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  • 3 weeks later...
4 hours ago, Mtrader9 said:

The % figure in Margin call when do positions get stopped out , at what figure ?

@Mtrader9, you will receive a margin call when the loss on a trade starts eating into your margin requirement for the trade and you will be advised to either add funds or close out the losing trade.

ESMA has ruled that there is to be an automatic close of the position by the broker if 50% of the margin requirement is eaten into by losses on a trade. See this example below.

image.png.1d736693a230e6692da411d909e5db57.png

 

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