Below you will find information on the standard Forex account. But before delving into it, let’s examine the notion of margin and leverage first.
Leverage is the loan a trader can get from his/her broker. Such a loan will enable him/her to transact with an initial capital that is relative small, i.e. it will enable him/her to transact economically and speedily.
Margin is the deposit that one has to put up for such a transaction; it is usually minimal and it covers potential losses.
For example, leverage will allow one to buy or sell $ 10,000 USD with only $ 25. Since RetailFX Limited enables its customers to trade by means of the eToro platform, it should be stated that if the example from above were to be applied in real-life, then with eToro one could not lose more than the initial investment of $25.
Margin Requirements for Forex account
Margin requirements are set depending on your selected leverage. For instance, if you choose to open a trade at a leverage of 1:400 a $25 per lot margin will be required, equal to approximately 0.25% margin or 1:400 leverage.
RetailFX enables these margin requirements by triggering automatic closing of trades once margin reaches the minimum. This procedure is strictly set for the traders benefit for the protection of his balance in the event of extreme rate fluctuations.
A automatic stop order is initiated if a the traders account balance falls below the required margin. For instance, in a standard Forex account, if a client has 10 lots of open trades an automatic stop will be triggered if trade value drops below $250. All trades will be closed at current market rates.
