XM MARGIN AND LEVERAGE:
IFSC, CySec, ASIC
Table of Contents
In the XM broker, leverage is the investment strategy that consists in borrowing money so as to increase the potential return of any investment. To be specific, leverage involves the use of a few financial instruments and borrowed capital.
In XM, leverage means that you can work with more capital than what is in your trading account – it means that you can use more debt to finance assets.
Leverage from 1:1 up to 888:1
Clients at XM have the flexibility to trade using 1:1 or 888:1 leverage and margin requirements.
Leverage allows you to trade larger positions than the amount of money in your trading account. Leverage ratios are expressed as a ratio of 50:1, 100:1, or 500:1. If you have $1,000 in your trading account and you trade tickets of 500,000 USD, your leverage will equate 500:1.
At XM, you have a free short-term credit allowance whenever you trade on margin. This allows you to purchase an amount that exceeds your account value.
XM Broker Margin
In trading, margin is the amount of collateral available to cover any credit risks involved. Margin is expressed as a percentage of position size (e.g. 5% or 1%), and it is the only reason to maintain sufficient funds in your trading account.
As an example, a position of $1,000,000 requires a deposit of $10,000 if the margin is 1%.
If the margin requirement for the new positions is equal to or less than the free margin of the account, new positions can be opened for Forex, Gold, and Silver.Hedged positions can be opened even with margin levels below 100% since the margin requirement is zero.
New positions can be opened for all other instruments if the margin requirement is equal to or less than the free margin of the account. Hedged positions have a margin requirement of 50%.
In order to open new hedged positions, the margin requirement must be equal or less than the total equity of the account.
XM Leverage Risk
You can make considerable profits from a relatively small investment simply by using leverage, but your losses can also be severe if you fail to apply proper risk management.
Therefore, XM offers a wide range of leverage that lets you choose your risk level. However, trading close to a leverage of 888:1 is not recommended due to the high risk involved.
XM Margin Monitoring
XM gives you the opportunity to monitor both your used and free margin in real-time.
Your equity is the combination of your used margin and free margin.Using margin means that you need to set aside 1% of your trade size as your margin deposit (for example, using 100:1 leverage on your account would require you to set aside 1% of your trade size).In trading, free margin is the amount of money you have left in your account; it fluctuates based on your account equity; you can use it to open additional positions, or to absorb losses.
XM Margin Call
Even though you are fully responsible for monitoring your trading account activity, XM follows a margin call policy to make sure the maximum possible risk does not exceed your account equity.
In the event your account equity falls below 100% of the margin required to maintain your open positions, we will attempt to contact you with a margin call notifying you that you do not have sufficient equity to support them.
XM Stop-Out Level
Your open positions are automatically closed when your equity falls below the stop-out level. In a retail account, the stop-out level is reached when your equity falls below 50% of the required margin.