Foreign exchange margin

All foreign exchange accounts operate with margin. Having a clear understanding of what margin requirements are is essential when engaging in foreign exchange market transactions. The margin itself represents the amount of money needed by the broker from a trader, upfront, in order to secure, and guarantee a leveraged position on behalf of the trader, in the market.

The actual amount required is calculated by the amount of leverage the individual trader intends to trade with. The requirement is a minor % compared to the actual dollar value of contract it represents in the open market. Margin is the collateral put up that limits the brokerage’s exposure and allows the individual to benefit greatly from leveraged positions. There are risks, as with all trading, but with margin in place these risks are minimized. If the trade closes in profit, the margin is returned to the trader along with profit. If the position closes in a loss, the trader forfeits the margin to the broker.

As a result, in order to open a new position the trader must maintain the Minimum Margin Requirements at all times, if not the risk to both parties would be unmanageable. MQF offers leverage of both 1:100, and 1:200 which translates to margin requirements of 1.0% and 0.5% respectively.

Margin Calls

If a Trader’s Equity should, at any time, equal or fall below 20% of the Used Margin for a Trader’s Account in total. MQF will liquidate any part of or all Open Positions in a Customer’s Account. Closure of positions will be done on the basis of best execution prices available to MQF at that time. MQF at its best effort will attempt to contact the trader with an Equity Notification if an individual’s Equity should, at any time, equal or fall below 20% of the Used Margin.

Margin Requirement Example

Beyond basic explanations, it is important to understand how margin operates in a regular trading environment. The clearest way to understand this is by going through the calculations involved. Margin requirement is calculated by the leverage of the instrument (0.5% or 1:200, 1.0% or 1:100) and the USD value of the position.

Now, let’s take a 10,000 EUR/USD (“Mini-Lot” or 0.1 Lots) position bought at price of 1.2500. The USD value of the position will be: 10,000 X 1.2500= 12,500 USD. With a margin requirement of 1.0% (1:100 leverage) the result will be 125 USD required to keep the position open.

Let’s take a 10,000 EUR/USD(“Mini-Lot” or 0.1 Lots) position bought at a price of 1.2500. The USD value of the position will be: 10,000 X 1.2500 = 12,500 USD. With a margin requirement of 0.5% (1:200 leverage) the result will be 62.5 USD required to keep the position open.

Standard Lot
(units 100,000) 1.0 Lot
Mini Lot
(units 10,000) 0.1 Lots
Micro Lot
(units 1,000) 0.01 Lots

Margin requirements may change from time to time. In order to prevent any confusion, MQF will always make its best effort, and will inform traders about any projected changes on Margin Requirements via email or phone at least a week in advance of Margin Requirement Changes. MQF has the right to liquidate any or all Open Positions whenever the Minimum Margin Requirement is not maintained.

風險提示: 差價合約(CFD)是壹種杠桿產品。差價合約(CFD)交易存在風險,因此可能不適用於所有投資者。 投資價值可能上升或下降,投資者可能損失所有投資。 在任何情況下,本公司不會對由差價合約(CFD)交易引起的任何個人或實體的全部或部分損失或損害負責。

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