HFM (former HotForex):What is the margin requirement? Method of calculation

HFM

When trading with MT4 or MT5, I think that the term “required margin” will come up. This term is obvious, but I think that those who have just started trading may not understand it, so I will explain the meaning of the term and how to calculate it.

What is margin requirement?

Margin requirement refers to the minimum amount that must be deposited in the account. Not only Forex, but even for stocks, you cannot trade unless you have made a minimum deposit in order to trade. This is called the “necessary margin”. The required margin for trading fluctuates depending on the leverage.

What is trading margin requirement?

Required margin for trading refers to the minimum amount (collateral money) required for trading. The required margin for trading fluctuates depending on the leverage.

Method of calculation

The calculation method assuming a leverage of 1000 times is as follows. Margin requirements can be calculated after calculating margin requirements.

Base price x 1/1000 = required margin

Required Margin x Position Holding Quantity = Required Margin

What is leverage

Leverage is a mechanism that allows you to trade many times larger than your deposited margin. It is also commonly referred to as the “lever principle”. It is a mechanism that allows you to earn a large amount of money with a small amount of margin, but on the other hand, if you raise the leverage too much, there is also the risk of losing a lot of money.

Traders trade based on the required margin. Margin calls and loss cuts are involved in this. These are introduced in the following articles.

Advantages of leverage

The biggest advantage of leverage is that you can trade with an amount many times the amount of your margin, which is your collateral. By using leverage, you may be able to expect large profits even with a small amount of capital. The higher the leverage, the greater the profit. This allows you to make a small amount into a very large amount.

Disadvantages of leverage

The disadvantage is that if a trade fails, you may incur a larger loss than expected. The fact that you can make a small amount into a large amount means that there is an equal chance of losing the entire small amount. When using leverage, it is necessary to set the leverage while assuming cases where losses may occur, so it is better to limit the leverage, especially for beginners.

HFM Leverage Limits

HFM has leverage limits. However, leverage is restricted only when the account balance is above a certain level. It doesn’t matter if it’s a small transaction. The maximum leverage is 2000x.

Leverage
~$100002000
$10000~$500001000
$50000~$300000500
$300000~75

Leverage by account

Leverage is 1000x for micro accounts and 500x for premium and zero spread accounts. Please note that different account types have different maximum leverage. HFM’s leverage of 1000x is the highest in the industry, but please note that 1000x leverage cannot be selected except for micro accounts.

コメント

Copied title and URL