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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

Due to specific trading conditions following instruments have higher margin requirements (lower leverage):

Instrument Description Margin requirements Leverage
BRENT.CMD/USD UK Brent Oil 1% 1:100
LIGHT.CMD/USD US Crude Oil 1% 1:100
GAS.CMD/USD Natural Gas 1% 1:100
COPPER.CMD/USD High Grade Copper 1% 1:100
AUS.IDX/AUD Australia 200 Index 1% 1:100
ESP.IDX/EUR Spain 35 Index 1% 1:100
EUS.IDX/EUR EU Stocks 50 Index 1% 1:100
DEU.IDX/EUR Germany 30 Index 1% 1:100
HKG.IDX/HKD Hong Kong Index 1% 1:100
FRA.IDX/EUR France 40 Index 1% 1:100
CHE.IDX/CHF Switzerland 20 Index 1% 1:100
GBR.IDX/GBP UK 100 Index 1% 1:100
JPN.IDX/JPY Japan 200+ Index 1% 1:100
USA30.IDX/USD US 30 Index 1% 1:100
USATECH.IDX/USD US 100 Tech Index 1% 1:100
USA500.IDX/USD US 500 Index 1% 1:100
 EUR/DKK Euro vs Danish Krone  10%  1:10 
 USD/DKK US Dollar vs Danish Krone  10%  1:10 
USD/RUB   US Dollar vs Russian Ruble 10% 1:10
USD/CNH US Dollar vs Chinese Yuan  10% 1:10
USD/HKD US Dollar vs Hong Kong Dollar 10% 1:10
CAD/HKD Canadian Dollar vs Hong Kong Dollar 10% 1:10
EUR/HKD Euro vs Hong Kong Dollar 10% 1:10
HKD/JPY Hong Kong Dollar vs Japanese Yen 10% 1:10

Maximum available leverage for weekends and other off-market days equals to the lowest value of the over-the-weekend leverage (1:30 for the accounts with top leverage 1:100, 1:60 for the accounts with top leverage 1:200, 1:90 for the accounts with top leverage 1:300) or to special margin requirements of the instrument or trading account.

Attention: Special margin requirements (leverages) remain in place disregards of clients requests for maximum leverage increase.

 

* The minimum margin requirements will differ if the initial leverage is changed
** See section "Over-the-weekend leverage" for additional information
*** Available for Dukascopy Europe clients only.
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 TABLE_HEADS.max_exposure
BRENT.CMD 650
LIGHT.CMD 650
GAS.CMD 4 500
COPPER.CMD 8 000
USA500.IDX 1 400
USATECH.IDX 650
USA30.IDX 160
DEU.IDX 250
GBR.IDX 350
FRA.IDX 600
AUS.IDX 750
JPN.IDX 20 000
HKG.IDX 1 000
CHE.IDX 350
ESP.IDX 300
EUS.IDX 900
XAU/USD 17 000
XAG/USD 160 000

Clients may request to wave/increase 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 09-Sep-2016. 

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.