Leverage and margin
One of the main attractive elements of forex trading is the use of leverage. This will allow you to maintain a much larger open position with a small amount of capital.
Option leverage from 1x to 1000x
Reliable zero cut processing
Reliable zero cut processing
Due to sudden price fluctuations, the loss cut may not be in time and you may lose more than your account balance (margin).Since we have adopted a zero cut system, even if the account balance becomes negative, we will offset it with the bonus grant (Correspondence time: am 8:00 and pm 9:00 ）。In addition, even for customers who have not received the bonus, we will reset the account balance to 0 yen and respond (Correspondence time: am 8:00 and pm 9:00 ）。You can use leveraged transactions with peace of mind because margins that exceed your assets will not be generated.
Margin definition
Margin is a deposit that you need to manage through leverage. Basically, this is the amount investors need for their account when they start trading with leverage. The amount of margin required depends on the size of the trade being made and the leverage used. For a trade size of one standard lot ($100,000), the required margin varies according to the leverage used as follows:
As shown in the table below, the higher the leverage used, the lower the margin required to maintain an open position in the market. Therefore, if an investor wants to maintain an open position of a standard lot ($100,000) with 1:50 leverage, they need to have $2,000 in their account to use as margin.
Margin monitor
Tech-FX allows you to control the impact of risk in real time by monitoring the margin used and available margin.
The total amount of the holding account is the sum of the margin used and the margin used. Margin usage is the funds that must be deposited as deposits in order to conduct a transaction. (For example, if you set the leverage of your account to 100 times, you need to keep 1% of the transaction amount as the required margin.) The available margin is to take an additional position or absorb the loss. It is the balance of the holding account that can be used for, and it varies depending on the total amount of the holding account.
What is leverage?
Leverage allows you to trade positions in excess of your account balance. Leverage is expressed as a ratio, such as 200:1 (200x), 500:1 (500x) or 1000:1 (1000x). Suppose you have $1,000 in your trading account. If you were to trade on the order of $500,000 against the yen, you would have a leverage of 500:1.
How is it possible to trade 500x your funds? This is because Tech-FX provides free short-term quota funds when trading on margin. This allows you to purchase an amount of currency that exceeds your account balance. Without this funding, you would only be able to buy and sell $1,000 at a time.
Risks when using leverage
There are risks as well as the potential for great profits. Leverage trading allows you to trade a large amount of money on hand, so the higher the leverage, the more the asset value of your account will fluctuate even with small movements in the foreign exchange market.
If the market fluctuates in an unfavorable direction, your position may be forcibly closed to prevent the spread of your loss. Leverage can make a big profit with a small amount of money, but at the same time there is a possibility of losing the deposited funds.