Margin rules: OANDA Global Markets

Your account leverage (margin expressed as ratio) is the maximum leverage applicable to you. For all practical purposes, the account leverage indicated for your specific account type is applicable.

The account leverage (the maximum applicable leverage) should not be confused with the margin tiers on each instrument (margin applicable on each trade).

When an instrument has margin tiers, it generally means that the larger the position you hold over a certain size, the higher the applicable margin rate.

Different margin rates may apply depending on the size of your position, as your position size increases so does the incremental margin rate on a tiered basis. The size of these tiers is based on US Dollar amounts, not the currency of the instrument. This means that to calculate the applicable margin rates, you need to first calculate the notional value of the position in US Dollars.

In order to keep a position open, you are required to maintain a minimum amount of equity in your trading account, this is known as margin requirement. This equity is your cash balance, plus any trading credits and the sum of your unrealised P/L.

The MT4 margin level % is defined as:

(equity /margin used) x 100
      

If the margin level of your trading account falls below 100%, we will send you an email to inform you. If this happens, you will be unable to open any new positions. You might also want to consider adding more funds to your account or closing some positions to reduce the amount of margin you are using.

Should your margin level then drop to 50%, you are no longer meeting your margin requirement and we shall trigger margin closeout, whereby we automatically close out one or more of your positions, starting with the position with the largest loss on an open market.

Take proactive measures to avoid getting a margin closeout on your account. For example:

• Monitor the status of your account continuously
• Trade with smaller trade sizes, keeping a comfortable portion of your account value
• Specify a stop-loss order for each open trade to limit downside risk. You can specify the stop-loss rate at the time you issue a trade or add a stop-loss order at any time for any open trade. You can also change your stop-loss orders at any time to take current market prices or other conditions into account. (Double click on an open trade’s stop loss field in the Trade terminal, then click Modify in the pop-up window to change the stop-loss.)

If you happen to be close to a margin closeout, and receive a margin call, you can avoid being closed out by:

• Closing individual positions to reduce the amount of margin required
• Transferring additional funds into your account. Note, however, that the time it takes to add funds could mean your funds arrive too late.

In this hypothetical example, we assume the following margin rates (sample rates that may not reflect the current rates):

A position size of 3.5m (or 35 lots) USD/JPY would have a margin requirement of USD 25,000.

This margin required would be calculated as:

(amount in tier 1 x tier 1 margin rate) + (amount in tier 2 x tier 2 margin rate)
      

If the margin of the instrument being traded is not in USD, then you need to convert the margin requirement from the instrument currency to USD in order to work out the margin tiers.

If you placed a single trade for 3M (30 Lots) EUR/USD at a price of 1.18, you first need to convert the Euro amount into USD to find both the tiers being used, as well as the margin requirement, as the example trading account is in USD.

In this hypothetical example, we assume the following margin rates (sample rates that may not reflect the current rates):

Position size x FX rate to USD = Net Open Position (USD)

3,000,000 x 1.18000 = 3,540,000
      

This would be the notional value of the trade in USD, using a EUR/USD rate of 1.18.

If you place a trade on the GER30, for 120 units at a price of 12,000 EUR using a USD Trading account, you first need to convert the notional value from Euros to a USD notional amount.

In this hypothetical example, we assume the following margin rates (sample rates that may not reflect the current rates):

Units x price = notional in EUR
      

120 x 12,000 = 1,440,000 EUR
      

Notional in EUR x FX rate to USD = net open position (USD)

1,440,000 x 1.18 = $1,699,200
      

In this hypothetical example, we show you how much marin your position would require if you had a trade with a notional value of more than 5 million and less than 50 million.

The following table assumes margin rates (sample rates that may not reflect the current rates):