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Using Margin Trading at SMArtX

Guide for applying leverage in SMArtX, including how to update model sleeve settings, trigger trades, and avoid common margin-related issues.

⏱ Overview

Margin in SMArtX allows you to increase exposure within a model sleeve by applying a leverage multiplier.

Leverage is applied at the model sleeve level (not the account level) and requires an Allocation Change Request (ACR) to take effect, which can include a:

  • Rebalance (trades must build).

  • Cash Management Deposit/Withdrawal.

  • Manual allocation/liquidation within model sleeve.

⍟ Why it Matters (Advisor WIIFM)

Margin and leverage allow you to:

  • Increase exposure to high-conviction strategies

  • Maintain allocations without adding new cash

  • Improve capital efficiency across portfolios

  • Control leverage at the model sleeve level

This flexibility allows advisors to fine-tune portfolio exposure while maintaining operational control within the SMArtX framework.

𐐐 When to Use This

Margin is most useful when:

  • You want more exposure to a strategy without reallocating capital

  • A client portfolio needs to stay fully invested while increasing risk exposure

  • You are managing tactical strategies that adjust exposure dynamically

⇛ How Does Margin Work in SMArtX

  • Margin is applied within a model sleeve, not the overall account

  • You adjust a leverage multiplier to increase exposure

  • Example:

    • $100,000 at 1.0 = $100,000 exposure

    • $100,000 at 1.5 = $150,000 exposure

  • The additional exposure creates a margin debit (negative cash) inside the sleeve

Best practice: Keep all margin inside the model sleeve, not in the managed portfolio sleeve.

𞡉 How to Use It

Step 1 — Update Leverage

  1. Go to Target

  2. Select the model sleeve

  3. Edit the Leverage tab

  4. Save the target

Step 2 — Activate the Change (Critical)

Leverage changes do NOT apply automatically

You must trigger one of the following:

  • Run a rebalance, or

  • Submit an Allocation Change Request (ACR)

Common Issue: “I changed leverage but nothing happened”

Why this happens:

Updating the target alone does not trigger trading.

How to fix it:

  • Run a rebalance, OR

  • Allocate a small amount (e.g., $1) to generate an ACR

⌘ Key Considerations

Proper Setup

  • Margin must be enabled at the custodian

  • Leverage should be applied only at the model sleeve

  • Margin should appear as:

    • ✅ Negative sleeve cash

    • ❌ NOT a negative APM balance

Track Manager Leverage Setting

  • ON → Follows model manager’s cash targets

  • OFF → Advisor controls exposure and cash levels

Use ON for tactical models that dynamically shift between cash and equities.

⍜ Common Pitfalls (and How to Fix Them)

Issue

Likely Cause

Fix

Large negative APM

Margin/leverage applied incorrectly at the account level

Move exposure into the model sleeve

Margin or leverage update not taking effect

No ACR/rebalance triggered, so the system didn’t recognize the change

Rebalance, trigger ACR, or allocate $1

Account not leveraging / unexpected trading behavior

Margin not enabled at custodian or account is cash

Confirm margin status with custodian

Risk Awareness

  • Leverage amplifies gains and losses

  • Advisors are responsible for:

    • Suitability

    • Monitoring exposure

    • Understanding multiplier impact

🗹 Quick Checklist

Before using margin:

✔ Custodian account enabled for margin

✔ Leverage applied to model sleeve

✔ Rebalance, CMA, manual allocation/liquidation

✔ Sleeve cash reviewed

𖧒 Need Help

Contact SMArtX Client Support if:

  • You cannot generate an ACR

  • Margin changes are not applying after allocation

  • Account behavior appears inconsistent

📞 561-559-7676 or use the 💬 chat in your advisor dashboard

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