June 21, 2016

Final Notice: XM reduces leverage on all trading instruments on MT4

As XM has already published the changed trading conditions due to the “Breixit Referendum Vote” in United Kingdom, XM is going to increase required margins on all financial instruments offers through their MT4.

Meaning that the leverage in your account will reduced accordingly, and you may need to deposit more or close some existing open positions in order to support other open positions.

The “Brexit Referendum Poll” will be placed on 23th Thursday, of June, and the changed trading conditions will be applied from 1 am server time on the day.

Please find the full details of the trading conditions below:

The date of the Referendum Poll

June 23th, Thursday in 2016

The changed trading conditions

Leverage of all Forex currency pairs and Precious Metals(Gold & Silver) to 1:25 (4% of margin requirement)

Leverage of all CFDs(Stocks, Commodity, Energy, Index) to 1:10 (10% of margin requirement)

The schedules of the change

From 1 am on 23th of June till the market opening on 27th of June, in server time GMT+3

What risk is expected?

Many traders see this as an opportunity and others see it as the moment of risk-off.

In case you are looking to trade through the period, or have existing open positions, you may want to be aware of the following risks.

Low Liquidity

As a large amount of money has gone rest and just looking at the vote from the side, you can expect low liquidity during the period. This can cause your positions “slippage” or “re-quote” in some cases.

High Volatility

On the other hand of the “risk-off side bench”, some investors are also looking to trade through the period and earn profit by utilizing this opportunity. So “heavy trading” is expected during the period, and this may cause extreme high volatility to the markets.

You could also see some price jumping, because of this “high volatility” and “low liquidity”.

Stop Out/Liquidation

This is another risk that can affect your profit/loss even if you have your positions hedged.

Because a majority of the brokers have already decided to reduce the maximum leverage, and also spread is most likely going wider than the normal hours.

Hedging positions isn’t really a smart option in some “high volatility” situation.


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