8 rules that you should know about Forex Dynamic Leverage.
Some Online Forex & CFD brokers are using a dynamic way to calculate margin requirement needed to maintain a trade in MT4.
This calculation is automatically adjusting the required margin needed for each open position.
Through this way client is enjoying lower required margin on smaller volumes which is increasing dynamically as volume is built up.
As the volume per Instrument of a client increases, the maximum leverage offered decreases accordingly.
Some rules of Dynamic Leverage
Unlike the normal leverage condition, ‘Dynamic Leverage’ has several rules that you must know.
- Preset account leverage will be considered for Forex. The account leverage won’t affect FUTURES and METALS margin requirement and it is relevant only for FOREX margin calculation.
- If account leverage is less than leverage level mentioned in dynamic leverage table for FOREX, then account leverage will be considered instead.
- As volume is increasing, if the account leverage is greater than the appropriate leverage level, then value from dynamic leverage table will be taken into consideration.
- Dynamic leverage calculation is based per symbol separately. If an account is trading multiple instruments at the same time then the one instrument won’t affect margin required of another instrument.
- In case of hedged positions the direction with larger volumes will be considered for margin requirement.
- Required margin is always calculated on base currency for FOREX.
- For METALS and FUTURES, calculation is based on currency denominator of the each instrument.
- If account currency is not the same, then appropriate current rate is being used in order for required margin to be shown in account currency.