Forex brokers need the appropriate tools to manage trading risks and increase returns in forex trading. Thus, we are introducing some common risk management tools, namely leverage and margin settings.
Leverage Settings and Calculation
Click Account→ Setting→ Create Account, then proceed to Margin Settings
According to the screenshot, the calculation method is as follows:
Initial/Required Margin (Leverage)
The required margin to open a position, expressed as a percentage. It is a percentage of the total trade value.
Example: When you buy 1 lot EUR/USD at a price of 1.08 and the initial margin ratio is 1%, then: Initial margin = 100,000 × 1.08 × 1% = 1,080 USD
which means You must have at least 1,080 USD in Equity to open this position.
1% corresponds to 1:100 leverage.
Maintenance Margin
The threshold for triggering a margin call, expressed as a percentage. It is a percentage of the total value of open positions.
Example: When you buy 1 lot EUR/USD at 1.08 and the maintenance margin ratio is 1%, then: Maintenance margin = 100,000 × 1.08 × 1% = 1,080 USD
If account Equity drops to 1,080 USD, new positions can’t be opened. You can only close the position.
Liquidation Margin
The forced liquidation level, expressed as a percentage. It is a percentage of the total cost of open positions.
Example: When you buy 1 lot EUR/USD at 1.08 and the liquidation margin ratio is 0.5%, then: Liquidation margin = 100,000 × 1.08 × 0.5% = 540 USD
If account Equity falls to 540 USD or below, the position will be liquidated.
Real Case Examples
| Setting | Remarks |
|---|---|
| Initial Margin Ratio: 1% | Leverage 1:100 |
| Maintenance Margin Ratio: 1% | Margin Call triggered when Equity / Used Margin = 100%. No new positions can be opened. |
| Liquidation Margin Ratio: 0.7% | Forced liquidation when Equity / Used Margin = 70% |
| Setting | Remarks |
|---|---|
| Initial Margin Ratio: 0.5% | Leverage 1:200 |
| Maintenance Margin Ratio: 0.5% | Margin Call at 100%. No new positions can be opened. |
| Liquidation Margin Ratio: 0.25% | Forced liquidation at 50% Equity / Margin |
| Setting | Remarks |
|---|---|
| Initial Margin Ratio: 0.2% | Leverage 1:500 |
| Maintenance Margin Ratio: 0.2% | Margin Call at 100% |
| Liquidation Margin Ratio: 0.1% | Liquidation at 50% |
Global vs Temporary Settings at Instrument or Account Level
In some cases, a specific trading instrument may require temporary leverage settings. Please follow the above relationships when configuring Initial, Maintenance, and Liquidation Margins.
Two liquidation methods:
- Liquidation at maximum loss positions: System will liquidate the positions with the most losses first after selecting the ECP Account
- Liquidate all positions: The system will close all positions when you unselect the ECP Account
Copy Settings to Other Accounts or Domains:
API Support
This feature supports API-based creation and updates. Please refer to the relevant section in the API document.
Need some Help?
Please contact your account manager or email [email protected].