Why sign up for a Practice Account? Trading foreign exchange or contracts for differences on margin carries a high level of risk, and may not be suitable for all investors. The possibility exists that you could sustain a loss of some or all of your deposited funds and therefore, you should not speculate with capital that you cannot afford to lose. Before deciding to trade the forex leverage offered by ICM you should carefully consider your objectives, financial situation, needs and level of experience.
What are the Initial and Maintenance Margin Requirements? Where can I view Friedberg Direct’s up-to-date margin requirements? What is the difference between Initial, Maintenance, and Liquidation Margin? How is margin represented in the Accounts Window? What are my options after I receive a Margin Warning? When will my positions be liquidated? How do I automatically reset my margin?
What if the market moves back in my favor? Margin can be thought of as a good faith deposit to maintain open positions. This is not a fee or a transaction cost, it is simply a portion of your account equity set aside and allocated as a margin deposit. At Friedberg Direct, margin requirements are derived from rates published by IIROC. It allows you to open trades that are larger than the capital in your account. Trading on margin can both positively and negatively affect your trading experience as both profits and losses can be dramatically amplified.
The calculation of the margin requirements is dependent on the currency pair of choice, as well as the currency that the account is denominated in. What are the Initial, Maintenance, and Liquidation Margin Requirements? Maintenance Margin Requirement denoted as is displayed in the column of the Simple Dealing Rates window. This is the amount required to open a new position.
This is the minimum amount required to maintain your open positions. Maintenance Margin Warning at which point you will no longer be able to place new trades. You will have approximately five days from 17:00 ET on the day that the Margin Warning Status is initiated to bring your account equity back above this level. Please note that weekends and bank holidays will count against the five days you are given to bring the account equity above the Maintenance Margin Requirement.
See below for details on when positions will be triggered to liquidate on the fifth day of a Margin Warning. If your account falls to the Liquidation Margin level, all of your open positions will be triggered to immediately be liquidated, even though you may still be in the five day grace period offered by the Maintenance Margin Warning. Used Margin, the Liquidation Margin Level. All positions are automatically liquidated when this reaches zero. As above, all positions are automatically liquidated when this reaches zero. This is the margin deposit required to maintain existing positions. This is the margin deposit available for opening new positions.
A Maintenance Margin Warning is triggered when this reaches zero. As above, a Maintenance Margin Warning is triggered when this reaches zero. W” means a Maintenance Margin Warning has been issued. Y” means liquidation of positions due to insufficient margin. In the Simple Dealing Rates window of this Canadian denominated account, it is noted that the EURUSD MMR is 500. Current Maintenance Margin levels can be found in the Simple Dealing Rates window of Trading Station II.
In the example below you have an account equity of CAD 5,000. You place a long 10K EURUSD position, requiring CAD 500 in margin. Your liquidation margin is set at CAD 50. You open your 10K EURUSD position.
Your equity falls to CAD 800. Your equity falls to CAD 500. When a Margin Warning triggers you will see a “W” in the MC column on the Trading Station. Your equity falls to CAD 125. 3: The market turns in your favor.
The market may turn in your favor bringing your equity back above your Used Maintenance Margin requirement. MC column will appear as “Y”. If at any time your Usable Margin falls to zero, your positions will be triggered to immediately liquidate. Accounts will be triggered to liquidate at 18:00 ET at the end of the fifth day of a Margin Warning unless your positions reach the Liquidation Margin level before. If the fifth day falls on a Saturday, open positions will be liquidated at market open on Sunday at approximately 18:00 ET.
Friedberg Direct processes most credit card deposits instantaneously, though credit card deposits can take up to 24 hours. There will be a daily maintenance margin check at 16:00 ET. You may contact Friedberg Direct if you wish to have your margin reset earlier. Leverage is a double-edged sword and can dramatically amplify your profits. It can also just as dramatically amplify your losses. Trading foreign exchange with any level of leverage may not be suitable for all investors.