Our leverage and margin requirements
Understand how leverage and margin work with Alpari.
What are leverage and margin?
Put simply, leverage is a way to boost your trading power.
Using leverage means you can trade a larger amount for a smaller deposit than would normally be required to own the asset outright.
You do this by borrowing capital from Alpari, offering you the opportunity to open larger positions.
Leverage is expressed as a ratio, such as 1:100. This means Alpari offers you 100 times your capital amount to trade.
Your leverage is based on your account type and the market you are trading.
You can think of margin as a down payment.
Margin refers to the level of funds you need to keep in your account to cover any possible losses on your trades.
You need to maintain your margin level to keep your positions open. Your margin level is calculated as a percentage, representing the ratio of equity in your account to the used margin. It’s an indicator for determining how much of your funds are tied up in current trades versus how much remains available for new opportunities.
If your margin level drops too low, you may trigger a margin call.
With a margin call, you may be required to deposit additional funds or sell off some assets to meet the minimum margin requirement. This protects you and us from potential losses.
Our leverage and margin requirements
Click to read more detailed information about the leverage and margin requirements and calculations for assets and accounts. Trading with leverage has the potential to increase both profits and losses. Trade carefully with effective risk management in place.
Calculating leverage and margin requirements
To calculate your margin requirements, you’ll need to refer to the leverage and margin rates (available to download above) for your trading account type and asset. You’ll also need to consider the aggregate notional value of your positions and the base currency of your account.
Here’s a couple of examples of calculating leverage and margin requirements for an account in USD.
To calculate the notional value, we multiply the number of lots by the contract size and price.
Notional value = 1 x 100,000 x 1.4584 = 145,840 USD
From the rate card: For FX Majors with a notional value between 50,001 – 200,000 USD, the leverage is 1:1,000 and margin is 0.1%. Therefore, we can calculate:
Leverage = 145,840 USD x 1,000 = 145,840,000 USD
Margin required = 145,840 USD x 0.1% = 145.84 USD
Notional value = 5 x 100,000 x 1.3175 = 658,750 USD
The aggregate notional value is the sum of all positions, so we have:
145,840 USD (position 1) + 658,750 USD (position 2) = 804,590 USD
For FX Majors with a notional value between 50,001 – 200,000 USD, the leverage is 1:1,000 and margin is 0.1%. For 200,001 – 2,00,000 USD, the leverage is 1:500 and margin is 0.2%.
So, for the first 200,000 USD, we have a leverage of 2,000,000 USD and a required margin of 200.00 USD, and the for the remaining 604,590 USD (804,590 USD – 200,000 USD), we calculate as follows:
Leverage = 604,590 USD x 500 = 302,295,000 USD
Therefore, our total leverage for both positions = 145,840,000 USD + 302,295,000 USD = 448,135,000 USD
Margin required = (200,000 USD x 0.1%) + (604,590 x 0.2%) = 200.00 USD + 1,209.80 USD = 1,409.80 USD
FREQUENTLY ASKED QUESTIONS
Leverage is a way to boost your buying power by trading with capital you borrow from us. We offer you leverage based on your trading experience, account type and instrument. Using leverage means you can trade a larger amount of an asset for a smaller deposit. Leverage is expressed as a ratio such as 1:100, which means we’ll offer you 100 times your capital amount to trade. While leverage may increase your profits, it can also increase losses. Effective risk management should be in place.