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Margin Requirements

Transactions conducted in the SWFX marketplace may be done on a margin trading basis, enabling a client to execute trades larger than the deposit, amplifing price movement effect. The multi-currency exposure of the account is limited by the total trading line which is calculated by multiplying the Equity of the account by the leverage agreed with Dukascopy Europe. By default the initial leverage for regular trading hours is set to 1:100, which allows to increase exposure up to a 100 times the amount of the equity, but can be set up to 1:300 by request (restrictions may apply).

Minimum margin requirements

In order to protect clients from incurring liability above their equity and protect Dukascopy Europe from associated risks, the following minimum margin policy applies: The minimum equity requirement for the self-trading account is 20 EUR. For accounts with different base currency the minimum amount of equity is calculated at the corresponding rate of the latest settlement. All open positions may be closed and the account may be blocked should the equity on the account reach the minimum margin requirement.

The minimum margin required to open a position depends on the desired leverage, currency pair and current market prices.

Special Margin Requirements

Maximum available leverage for weekends and other off-market days equals to the lowest value of the over-the-weekend leverage or to special margin requirements of the instrument or trading account.

* The minimum margin requirements will differ if the initial leverage is changed
** See section "Over-the-weekend leverage" for additional information
*** If equity for the self trade account is less than 20 EUR or equivalent in foreign currency, the account may be blocked by Dukascopy Europe.

Use of leverage

The Use of Leverage is an indicator showing how much of the collateral is currently used by the exposure on the trading account. It is displayed in percentage in real-time and calculated as follows:

  Used Margin  
Use of leverage =                                 x 100
  Equity  

*Note that the Used Margin equals to the exposure divided by leverage

Example:
Position of 1 mio EURUSD at 1.2000
Exposure on the account = USD 1,200,000
Profit and losses = 0
Leverage authorized for the account = 1:20
Equity = USD 100,000
Used Margin = Exposure on the account / Leverage = USD 1,200,000 / 20 = USD 60,000
Use of leverage = Used Margin / Equity = 60,000 / 100,000 = 60%

Margin call and margin cut policy

Margin call (use of leverage >100%) means a situation where the margin requirements do not allow the client to increase exposure on his account.The client may only close the existing unhedged positions or hedge current positions in order to reduce exposure. Despite the margin call level being reached, the positions will not be closed automatically. The automated system will cancel all placed bid/offer orders that can increase the exposure.

Margin cut or cut-off level (use of leverage ≥ 200%) - if the use of leverage reaches or exceeds 200%, Dukascopy Europe has the right (but not the obligation) to fully or partially reduce the client's exposure by closing existing positions and/or by opening new positions in the opposite direction. Usually the system automatically reduces exposure so that the use of leverage is brought to approximately 100%. However, self-traders can set full close of all open positions in case of margin cut.

 Use of leverage Description
0% No exposure
<100% Normal status
≥100% Margin call: trader is not able to increase exposure on the account if the use of leverage is more than 100%
≥200% Margin cut: typically system will open hedging positions in the opposite direction for all positions which contribute to exposure on the account. The use of leverage will be decreased to 100% or less.
Over-the-weekend leverage

Maximum available leverage for the weekends and other market closure days is typically set to 1:30 (1:90 for accounts with maxumum leverage 1:300). The purpose of this policy is to mitigate risks caused by potential price gaps during market closure, which may seriously threaten invested funds.

 

Standard algorithm: Over-the-weekend trading conditions are effective starting 3-4 hours before each market closure (weekend, holidays, etc) until re-opening of the market. For usual Friday night closure, over-the-weekend conditions would become effective at 18:00 [GMT]. As a result of leverage contraction, the use of leverage can increase if the account has exposure. Regardless of the over-the-weekend margin conditions, the general execution mechanisms of the margin call and margin cut remain the same. That is, if the amount of equity on the account is not sufficient to support existing positions with a leverage of 1:30, the margin cut procedure will be applied to the account (see paragraph Margin Call and Margin Cut).

Maximum instrument exposure

Maximum net exposure of each currency pair on one trading account is limited to a position of 25 million of primary currency. For precious metals and CFDs maximum net exposure is specified in the table below:

Instrument Maximum exposure in contracts (for CFDs) / 
Oz (for precious metals)
BRENT.CMD 2500
LIGHT.CMD 2500
USA500.IDX 7000
USATECH.IDX 3500
USA30.IDX 850
DEU.IDX* 1350
GBR.IDX* 2200
FRA.IDX* 3000
AUS.IDX 2700
JPN.IDX 750
HKG.IDX 550
CHE.IDX 1650
ESP.IDX* 1400
EUS.IDX* 4200
XAU/USD 13000
XAG/USD 940000

Clients may request to wave the maximum exposure limit.
In this case the account leverage will be reduced to 1:20 (1:10 over-the-weekend).

The exposure limits come into effect as of 06.07.2016.

* maximum exposures on the following CFD Indices are temporarily applied:

  • GBP/IDX – 30 contracts
  • DEU.IDX/EUR – 50 contracts
  • ESP.IDX/EUR – 50 contracts
  • EUS.IDX/EUR – 150 contracts
  • FRA.IDX/EUR – 150 contracts

Limitation is applied to orders that create new positions or increase existing exposures exclusively. It does not affect positions opened prior to July 06.

Stock CFD Maximum Instrument Exposure

Maximum exposure per single stock CFD is 100,000 USD or equivalent in other currencies. Clients may request to increase maximum exposure to 250,000 USD, in this case leverage will be reduced to 1:2 from default setting of 1:10. Clients may request to increase leverage to 1:20. In this case maximum exposure per CFD will be 50,000 USD. Over-the-weekend leverage reduction rules do not apply to single stock CFDs.

Instrument Maximum
exposure
in contracts
(for stock CFDs)
    ADS.DE/EUR
750
    ALV.DE/EUR
613
    BAS.DE/EUR
1,271
    BAYN.DE/EUR
877
    BEI.DE/EUR
1,096
    BMW.DE/EUR
1,125
    BOSS.DE/EUR
1,595
    CON.DE/EUR
467
    DAI.DE/EUR
1,462
    DB1.DE/EUR
1,170
    DBK.DE/EUR
5,848
    DPW.DE/EUR
3,509
    DTE.DE/EUR
5,848
    EOAN.DE/EUR
10,965
    FME.DE/EUR
1,154
    FRE.DE/EUR
1,371
    HEI.DE/EUR
1,139
    HEN3.DE/EUR
852
    IFX.DE/EUR
7,310
    LHA.DE/EUR
7,018
    LIN.DE/EUR
691
    LXS.DE/EUR
1,994
    MRK.DE/EUR
1,096
    MUV2.DE/EUR
552
    PAH3.DE/EUR
1,827
    PSM.DE/EUR
1,994
    RWE.DE/EUR
7,434
    SAP.DE/EUR
1,271
    SDF.DE/EUR
3,987
    SIE.DE/EUR
933
    TKA.DE/EUR
5,160
    TUI1.DE/EUR
6,595
    VNA.DE/EUR
2,924
    VOW3.DE/EUR
680
Risk disclosure

Trading foreign exchange on margin carries a high level of risk, and may not be suitable for all investors. It is highly recommended to maintain the use of leverage at normal levels. The client must always keep in mind that margin trading increases potential loss, as well as potential profit, and invested funds can quickly suffer losses in situations where the market prices exhibit strong volatility, potentially creating an adverse environment for the highly leveraged participant. The client shall be solely responsible for maintaining sufficient margin in relation to the existing positions.

To learn more about Dukascopy Europe ECN Accounts, please write us: [email protected], call us: +371 67 399 000 or alternatively ask for a call-back.