The OANDA fxTrade platform supports margin trading, which means you can enter into positions larger than your account balance. One advantage of margin-based trading is that you can leverage the funds in your account and potentially generate large profits relative to the amount invested.
The downside is that you have an equal opportunity to incur significant losses in your account. It is a good practice to utilize stop loss orders to limit potential losses when utilizing leverage. Stop Loss and Take Profit orders are not guaranteed; gaps in market pricing may cause your Stop Loss orders to be filled at a less advantageous price, or your Take Profit orders to be filled at a more advantageous price than the level you specify. Stop Loss orders are not guaranteed; gaps in market pricing may cause your Stop Loss orders to be filled at a less advantageous price.
A good faith deposit or performance bond. In leveraged trading, the margin amount is held in deposit while the trade is open. The amount of margin required to enter a trade is determined by the rules discussed below. Although there is no minimum margin deposit required to open an fxTrade account with OANDA, the Margin Available in your account will limit the size of the positions you can open.
The reciprocal of Margin. The maximum leverage allowed is determined by the regulators in each geographic region. Clients and OANDA may choose to be conservative and limit leverage utilized to lower levels than allowed by the regulators. The Net Asset Value represents the current value of your account.
The minimum margin required by the regulator for the instrument. The margin required for the instrument in your account. This is the greater of the Regulatory Margin Requirement for the instrument and the margin you selected for your account. The Margin Used represents how much of your Net Asset Value is currently held as margin against your open positions. The Margin Used is equal to the position size multiplied by the Margin Requirement, summed up over all open positions.
This amount is then converted into the currency of the account using the current midpoint rate. See the Margin Used Calculation Example below for an example on how to calculate your margin used. See the Margin Closeout Value Calculation Example below for an example of how to calculate your account equity.
The Initial Margin for a trade is equal to the trade size multiplied by the Margin Requirement. This amount is then converted into the currency of the account. When opening a new trade, your Initial Margin must be less than or equal to your Margin Available. If your Initial Margin is greater than your Margin Available, you cannot open the trade.
If your Margin Closeout Value falls to less than half of your Margin Used, all open positions will be automatically closed using the current fxTrade rates at the time of closing. If trading is unavailable for certain open positions at the time of the margin closeout, those positions will remain open and the fxTrade platform will continue to monitor your margin requirements.
When the markets reopen for the remaining open positions, another margin closeout may occur if your account remains under-margined. Note about Margin Closeouts: In a fast moving market, there may be little time between warnings, or there may not be sufficient time to warn you at all.
The Regulatory Margin Used is equal to the position size multiplied by the Regulatory Margin Requirement specified by the regulator, summed up over all open positions. When you receive a Margin Call alert by email, you are required to deposit additional funds or close open positions to return your Margin Closeout Value to greater than your Regulatory Margin Used.
Should you use your own margin requirements that are more conservative than the Regulatory Margin Requirements, you may not receive one of these margin calls and should only expect them when the account falls below the regulatory value.
OANDA will send daily margin call emails to accounts that fall below margin requirements at 3: When an account remains under-margined for 2 consecutive trading days, all open positions will be automatically closed using the current fxTrade rates at the time of closing.
If trading is unavailable for certain open positions at this time, they will be automatically closed using the current fxTrade rates when the markets for those instruments re-open. Margin Requirement is checked at 3: Even if the account satisfies the Margin Requirement during the day but falls below for the 3: ET check, the account will be considered undermargined.
Note about Margin Call: I t is important to note that Margin Calls are calculated only using the Regulatory Margin Requirements. If you have selected a Margin Requirement that is more conservative than the Regulatory Margin Requirement, you may not receive any Margin Call alerts. You have a USD account with maximum leverage set to For the leverage calculation, the lower of the maximum regulated leverage and your selected leverage is used. The regulator allows See more detailed information on how to calculate margin.
When the Margin Closeout Value declines to half, or less than half, of the Margin Used, all tradable open positions in the account will automatically close using the current fxTrade rates at the time of closing. When the markets reopen for the remaining open positions, another margin closeout may occur if your account remains undermargined.
For example, if your account remains undermargined, starting on Monday before 3: If the account recovers before the end of 2 consecutive trading days by meeting the margin requirements at the 3: ET daily margin check, a new count will start again from the day the account falls below margin requirements again.
For example, if your account is undermargined on Monday at 3: Use a lower leverage so you can impose a higher margin requirement on yourself.
This way, you will not be tempted to enter into positions beyond your comfortable leverage level. You will also be aware of a potential margin closeout sooner, and be able to increase leverage as a last resort to head it off.
If you choose a lower leverage, constant monitoring is still required to avoid margin closeouts. Specify a stop-loss order for each open trade to limit downside risk. You can specify the stop-loss rate at the time you issue a trade, or add a stop-loss order at any time for any open trade. You can also change your stop-loss orders at any time to take current market prices or other conditions into account. Click on an open trade in the "Trades" table, then click "Modify" in the pop-up window to change the stop-loss.
Your trade is closed at the current fxTrade rate, which may vary from your stop loss price -- especially when trading resumes after periods of market closure. If you happen to be close to a margin closeout, the unique features of the fxTrade platform provide some simple strategies to avoid it:. Incrementally reduce the size of your positions as you get close to a margin closeout.
This effectively lowers the amount of margin required, giving you more breathing room. If you are using a lower leverage, you can increase the leverage on your account as a last resort. Add funds to the account. Note, however, that the time it takes to add funds could mean your funds arrive too late.
You must maintain sufficient margin in your account to support your open positions. You are responsible for monitoring your account to prevent margin closeouts. A margin closeout will be triggered in the following circumstances: OANDA will send daily emails to accounts that fall below margin requirements at 3: When an account remains undermargined for 2 consecutive trading days, all tradable open positions in the account will automatically close using the current fxTrade rates at the time of closing.
Any remaining open positions will automatically close at the current fxTrade rate when the markets for those instruments re-open. For example, Monitor the status of your account continuously. If you happen to be close to a margin closeout, the unique features of the fxTrade platform provide some simple strategies to avoid it: Close individual positions to reduce the amount of margin required.
Transfer additional funds into the account from another subaccount. Losses can exceed investment.More...