TW.PR
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- Oct 8, 2011
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Maintenance margin and stop out level
At Trader’s Way, Prime Online Forex and CFD broker, we provide our clients with the very latest in trading tools, to the most competitive trading conditions in the market, enabling them to take advantage of even the smallest market movement. As part of our ongoing series, here’s a brief recap on Maintenance margin and stop out levels. Maintenance margin is the least margin that is required to keep a position open; once a trader’s margin falls below the stop out level, all open positions are closed. Do note that the stop out level may vary from one broker to the next.
Maintenance Margin = Initial Margin x Stop-Out Level
Example: Sam's account balance is 2,000 USD. His leverage is 1/100. Sam wants to open 1 standard lot of EURUSD. The current EURUSD rate is 1.3000. Stop-out = 10%.
Initial Margin = 100,000 EUR / 100 = 1,000 EUR (or 1% margin requirement) = 1,300 USD
Maintenance Margin = 1,300 USD x 10% = 130 USD
When equity on Sam's account goes below 130 USD, the position will be closed automatically.
For more information, please check out Trader’s Way.
At Trader’s Way, Prime Online Forex and CFD broker, we provide our clients with the very latest in trading tools, to the most competitive trading conditions in the market, enabling them to take advantage of even the smallest market movement. As part of our ongoing series, here’s a brief recap on Maintenance margin and stop out levels. Maintenance margin is the least margin that is required to keep a position open; once a trader’s margin falls below the stop out level, all open positions are closed. Do note that the stop out level may vary from one broker to the next.
Maintenance Margin = Initial Margin x Stop-Out Level
Example: Sam's account balance is 2,000 USD. His leverage is 1/100. Sam wants to open 1 standard lot of EURUSD. The current EURUSD rate is 1.3000. Stop-out = 10%.
Initial Margin = 100,000 EUR / 100 = 1,000 EUR (or 1% margin requirement) = 1,300 USD
Maintenance Margin = 1,300 USD x 10% = 130 USD
When equity on Sam's account goes below 130 USD, the position will be closed automatically.
For more information, please check out Trader’s Way.