XM’s Flexible Leverage from 1:1 up to 1000:1

At XM clients have the flexibility to trade by using the same margin requirements and leverage from 1:1 to 1000:1.

Margin is the amount of collateral to cover any credit risks arising during your trading operations.

Margin is expressed as the percentage of position size (e.g. 5% or 1%), and the only real reason for having funds in your trading account is to ensure sufficient margin. On a 1% margin, for instance, a position of $1,000,000 will require a deposit of $10,000.

For Forex, Gold and Silver, new positions can be opened if the margin requirement for the new positions is equal or less than the free margin of the account. When hedging, positions can be opened even when the margin level is below 100% because the margin requirement for hedged positions is Zero.

For all other instruments, new positions can be opened if the margin requirement for the new positions is equal or less than the free margin of the account. When hedging, margin requirement for the hedged position is equal to 50%. New hedged positions can be opened if the final margin requirements will be equal or less than the total equity of the account.

Trade XM’s 1:1000 Leverage

Margin, Leverage and Rollover

1. Margin and Leverage

Forex, as a financial product, provides the ability to leverage capital. Leverage is a ratio of the required deposit to the amount used in a transaction. At XM, they provide leverage of up to 1:1000.

With leverage of 1:100, an investor can open a position with a value of USD 100,000 with only USD 1,000. This USD 1,000 is at 1% margin. A margin is an amount that is being held on the account as a guarantee in order for the investor to open a position larger than the account value.

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2. Rollover

If you hold your positions open after the end of a trading day, there is a daily rollover interest rate that a trader either pays or earns, depending on your established margin and position in the market. At XM, it is calculated automatically at the end of every trading day. The rollover process starts at 23:59 server time. Our server time is set at GMT+2.

Trade XM’s 1:1000 Leverage

3. Calculating Profit and Loss

Our online trading platform will automatically calculate the P&L of your open positions. However, it is useful to understand how this calculation is made to understand your profit and loss potential on each trade.

To illustrate a Forex trade, consider the following two examples. Let’s say that the current bid/ask for EUR/USD is 1.1273/76, meaning you can buy 1 euro for 1.1276 or sell 1 euro for 1.1273.

Suppose you decide that the Euro will appreciate against the US dollar. To execute this strategy, you would buy EUR/USD, and then wait for the exchange rate to rise.

With a 1:100 leverage, your initial margin deposit would be approximately $1,127.6 to open this position.

As you expected, Euro strengthens to 1.1285/88 from 1.1273/76. Now, to realize your profits, you sell 100,000 Euros at the current rate of
1.1285, and receive $112,850.

You bought 100k Euros at 1.1276, paying $112,760.

Then you sold 100k Euros at 1.1285, receiving $112,850.

That’s a difference of 9 pips, or in dollar terms

$112,850 – $112,760= $90

Total profit = US $90

Now in the example, let’s say that we once again buy EUR/USD when trading at 1.1273/76. You buy 100,000 Euros and you pay 112,760
dollars (100,000 x 1.1276).

However, Euro weakens to 1.1265/68. Now, to minimize your losses

you sell 100,000 Euros at 1.1265 and receive $112,650.

You bought 100k Euros at 1.1276, paying $112,760.

You sold 100k Euros at 1.1265, receiving $112,650.

That’s a difference of 11 pips, or in dollar terms

$112,760 – $112,650 = $110

Total loss = US $110