To avoid margin calls and ensure your account remains in good standing, it's essential to maintain a margin level above 150%. Overleveraging can lead to your account being flagged for a potential breach. Below, we’ll guide you through the calculation process using your account equity, the instrument’s leverage, current price, and contract size.
We’ve included two examples—one for a $30,000 account and another for a $120,000 account—to demonstrate how to stay above the 150% margin level.
Step-by-Step Calculation Guide:
Step 1: Determine Your Account Equity
This is your current balance, including any floating profits or losses from open positions.
Step 2: Calculate the Max Margin Requirement
To ensure you stay above the 150% margin level, use this formula to determine how much of your equity can be used for opening positions:
This ensures that your account retains a buffer above the 150% margin level, leaving room for market fluctuations without triggering a margin call.
Step 3: Check the Leverage for the Asset
Leverage on our platform depends on the asset class:
Forex: 1:30
Commodities: 1:10
Indices: 1:10
Crypto: 1:2
Step 4: Find the Current Price of the Instrument
Check the latest price for the asset you want to trade, such as EUR/USD, Gold, or Bitcoin.
Step 5: Calculate the Maximum Lot Size
Use this formula to determine the maximum lot size you can trade without dropping below the 150% margin level:
Example 1: $30,000 Account (XAU/USD - Gold)
Parameters:
Account Equity: $30,000
Leverage: 1:10 (for metals like Gold)
Price of Gold (XAU/USD): $1,800/ounce
Step-by-Step Calculation:
Max Margin Requirement:
2. Max Lot Size:
Since one standard lot in Gold represents 100 ounces, with $30,000 equity, you can trade up to 1.11 standard lots (or 111 ounces) of Gold without dropping below the 150% margin level.
Example 2: $120,000 Account (US100 - Nasdaq 100 Index)
Parameters:
Account Equity: $120,000
Leverage: 1:10 (for indices like Nasdaq 100)
Price of US100 (Nasdaq): 15,000 points
Step-by-Step Calculation:
Max Margin Requirement:
Max Lot Size:
With $120,000 equity, you can trade up to 5.33 lots on the US100 index without dropping below the 150% margin level.
Frequently Asked Questions:
Q: Why is maintaining a margin level above 150% important?
Keeping your margin above 150% ensures you have enough free margin to withstand market fluctuations. Dropping below this level may trigger margin calls or lead to your account being flagged for a potential breach.
Q: What happens if my margin level drops below 150%?
Your account may be flagged for a breach if your margin level falls below 150%. Continued decline could lead to forced liquidation of positions. Our risk team will review your account, which may result in a payout denial, reset to Phase 1, or a hard breach. As a firm focused on long-term sustainability, this process ensures that our funded traders align with the risk profile of the trades we want to send to the live market.
Q: How does leverage impact the maximum lot size I can trade?
Higher leverage allows you to control larger positions with less margin, but it also increases your exposure to market risk. Proper lot size management is crucial to avoid overleveraging and maintaining a healthy margin level.
Q: What are the typical leverage levels for different assets on your platform?
Leverage on our platform varies by asset class:
Forex: 1:30
Metals/Commodities: 1:10
Indices: 1:10
Crypto: 1:2
Q: How can I manage my lot size to stay above the 150% margin level?
Monitor your equity and margin levels regularly, adjusting your lot size if necessary. If your equity changes due to floating profits or losses, recalculate your maximum lot size. You can use the formula we provided or an online margin calculator.
It’s important to note that opening multiple positions simultaneously (often called layering a position) can still constitute overleveraging, even if individual trades stay within the margin limits. The total exposure from all positions should be factored in to avoid exceeding the 150% margin requirement.