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Margin & Leverage

What are they?

How do they work?

If you have an account leverage of 1:1 and wish to use $1,000 on one single transaction as the margin, then you will have exposure of $1,000 in base currency ($1,000) = 1 x $1,000 = $1,000 (trade value).
If you have an account leverage of 100:1 and wish to use the same amount of margin on a single transaction ($1,000), then you will have exposure of $100,000 in base currency ($1,000) = 100 x $1,000 = $100,000 (trade value).

How to check Leverage?

At Eightcap, all trading accounts are initially set up with a leverage of 100:1 as a standard and clients have the option of changing the ratio from 1:1 all the way up to 500:1.
In order to help traders in minimising their risks, we have specific leverage restrictions in place (see table). To see how much leverage you can use on your trading account, please refer to the information. It is there to guide you on the available leverage options.

How to choose Leverage?

Your trading style will greatly dictate your use of leverage and margin. It is imperative to understand that trading with leverage can affect your trading experience both positively and negatively as both profits and losses are dramatically amplified. Trading with higher leverage ratios may not be suitable for all type of traders and may be too risky for some.
Available LeverageMin. Account EquityMax. Account Equity
500:1$500$5,000
400:1$500$10,000
300:1$500$50,000
200:1$500$100,000
100:1$100$100,000+
50:1$100$100,000+
25:1$100$100,000+
1:1$100$100,000+
In order to help traders in minimising their risks, we have specific leverage restrictions in place (see table). To see how much leverage you can use on your trading account, please refer to the information. It is there to guide you on the available leverage options.

How to change Leverage?

If you wish to change the leverage ratio on your Eightcap trading account, you can do it easily either by submitting a request through the Client Portal area or emailing us at customerservice@eightcap.com.

Again, higher leverage ratios may not be suitable for every trading style. If you are looking to trade with higher leverage, please remember: leverage is a double-edged sword. Yes, it can assist in opening a larger trade size, but thus amplifies gains and losses.

FAQs

Margin trading refers to using borrowed funds from a broker to purchase a financial asset or assets in a larger volume. Traders use margin to buy more stock than they would normally be able to (or afford to do). Margin is then used to create leverage to enter larger trades or open larger positions, in a bid to magnify gains.

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Platform time is the real time trading platforms are set in, including the software’s charts and data.
EightCap clients have access to MetaTrader 4 (MT4) and MetaTrader 5 (MT5) and all clients trade under the same platform time. The platforms are set to Greenwich Mean Time (GMT) + 2 hours.

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Charts are very important when it comes to efficient trading and interpreting market data correctly. Traders have the opportunity to use various charts and indicators that best suit their needs. Charts with a clear design and easy to read elements help the trader to take advantage of the rising trading opportunities on the Forex and CFD market. The most popular, found in MetaTrader 4 and in MetaTrader 5 is the candlestick chart. Candlesticks form various patterns that can help the trader confirm different market trends and make better trading decisions.

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The Bottom Line

Using leverage allows for significant scope to maximise the returns on profitable Forex trades. After all, applying leverage means you can be controlling currencies worth 100 or more times the value of your actual investment.

However, if the underlying currency in one of your trades moves against you, the leverage in the Forex trade will magnify your losses and these losses may add up very quickly and without sufficient margin remaining in your account, you run the risk of those losses turning into realised losses.

If you are a new or inexperienced trader, we highly suggest that you consider limiting your leverage to a low level. Trading with higher leverage is one of the most common errors committed by new and inexperienced Forex traders.

Please also keep in mind that it is client’s own responsibility, not us, to continually monitor positions and make any margin payments as they become due.

Our trading platforms have a built-in automatic stop-out system to monitor and control risk exposure in real-time. If your account equity falls below the margin requirement, a ‘Margin Call’ warning will ensue, advising that you do not have sufficient equity to support current open positions – please note that this does not guarantee the balance will not go into negative; trade execution depends on market liquidity and pricing.