Margin and Leverage
Margin
The maximum leverage that Trendoks provides to its traders & investors is 1:200, where margin is calculated as 1% of the base currency. Leverage is provided to clients and investors in order to maximize their profit.
Margin Calculation
As Margin is 1% of the Base Currency, 1/100 x Dollar Margin requirement , 0.01 * $ 137,000.00 = $1370.00 . Therefore client have to have a minimum of $1, 3700.00 in order to be able to buy/sell this position.
Leverage
The maximum leverage that Trendoks provides to its traders & investors is 1:200, where margin is calculated as 1% of the base currency. Leverage is provided to clients and investors in order to maximize their profit.
What Does BUY 1 Lot of EUR/USD Mean?
1 lot of EUR/USD means that a client bought 1 standard contract of 100,000 Euros and sold the equivalent of this contract in US Dollars.
In an example where the rate of EUR/USD = 1.3700, a client would need to exchange $137,000.00 in order to buy 1 standard contract of € 100,000.00 , how do we calculate the margin requirement?
Margin is calculated based on the Base Currency, therefore to buy/sell 1 lot of EUR/USD you have to have Free Margin of the equivalent in base currency of the quoted currency.
Please see below an example of physical and leverage trading:
| Physical Trading (Leverage 1:1) |
Leverage Trading (Leverage 1:200) |
Client Buys € 100,000.00 at
the rate of 1.37000. |
Client Buys € 200,000.00
(using only € 1,000.00 Euros due to leverage)
at the rate of 1.37000. |
Therefore the client exchanged
$ 137,000.00 for € 100,000.00 . |
Therefore the client exchanged $ 274,000.00 for € 200,000.00 . |
| After a period of time the rate of Euros against the Dollar has incremented to the level of 1.40000 |
After a period of time the rate of Euros against the Dollar has incremented to the level of 1.40000 . |
| Therefore client exchanges the € 100,000.00 back to US Dollars at the rate of 1.40000 . |
Therefore client exchanges the € 200,000.00 back to US Dollars at the rate of 1.40000 . |
| € 100,000 x 1.40000 (Rate of EUR/USD) = $140,000.00 . |
€ 200,000 x 1.40000 (Rate of EUR/USD) = $280,000.00 . |
| Profit = Final Value - Initial Value
$3000 = $140,000 - $ 137,000 |
Profit = Final Value - Initial Value
$6000 = $280,000 - $ 274,000 |
Further explanation:
Things to consider (Leverage is 1:200, Margin is 1% & EUR/USD rate is 1.3700) , 1 lot of standard contract of EUR/USD = € 100,000.00 Euros. In order to find the equivalent is Dollars, we have to multiply the Contract size in dollars. Therefore 1 lot of EUR/USD = 274,000.00 .
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