Margin and Leverage
- Flexible leverage ranging from 1:1 to 400:1
- Never pay a negative balance
- Monitor your risk exposure in real-time
- No change in margin requirement overnight and during weekends
At Star Financial Markets we offer forex flexible leverage
from 1:1 to 400:1 to all our clients depending on the type of
trading account they select. The same policy for our margin and
leverage is applicable to all clients from all International
Trading with Leverage is the ability to trade a position larger than the amount of money in your account. Leverage is expressed as a ratio, for example 50:1 or 400:1.
Assume that you have an account with $10,000. You trade ticket sizes of 4,000,000 USD/JPY. This equates to a leverage of 400:1. How can you trade 400 times the amount of money you have at your disposal?
The answer is that when you trade on margin you are using a free short-term credit allowance from Star Financial Markets. This short-term credit allowance is used to purchase an amount of currency that greatly exceeds your account value. Without margin, you would only be able to buy or sell tickets of $10,000 at a time.
Margin serves as collateral to cover any losses that you might incur. Since nothing is actually being purchased or sold for delivery, the only requirement, and indeed the only real purpose for having funds in your FX account, is for sufficient margin.
Margin is expressed as a percentage of position size, for example 5% or 1%. On a 1% margin, a position of USD 1,000,000 requires a deposit of USD 10,000.
does Star Financial Markets offer?
When you open your account with Star Financial Markets you choose your leverage ranging from 1:1 to 400:1. Accordingly your margin requirement ranges between 100% and 0.2%. Margin requirement remains constant throughout the week. Margin requirements do not widen overnight and during weekends.
Star Financial Markets allows you to request an increase or decrease of your chosen leverage.
Leverage allows you to potentially make large profits from a relatively small initial investment. However without proper risk management it can dramatically amplify your losses. The leverage capacity Star Financial Markets offers reflects our willingness to provide the traders with the level of risk they wish to adopt, we do not however recommend trading close to 400:1 leverage as this engages a large amount of risk. Ultimately the choice is left to the traders to make transactions that meet their risk tolerance.
Can I lose more money than I deposited?
No. Your maximum risk of loss is limited by the amount in your account.
Monitor your Margin
Our trading platform has been designed to effectively allow you to control risk exposure in real time. This is achieved by monitoring your used and usable margin. Used Margin is the amount of money you need to put down as a deposit to hold your trade. Therefore, if your account is set to 100:1 leverage, you will need to set aside 1% of your trade size as margin.
Your Usable Margin is the amount of money left in your account that is available to open additional positions or to absorb any losses, and it fluctuates with your account’s Equity. Used Margin and Usable Margin added together, equal your Equity.
Our Margin Call Policy guarantees that your maximum possible risk is your account equity. If the equity in your account drops to 50% of the margin required to maintain your open positions, you will receive a margin call. This is a warning that your equity is not enough to support your open positions. At this point you will have the option to deposit sufficient money in order to maintain your open positions.
As a service, Star Financial Markets dealers will attempt to contact customers accustomed to dealing by telephone whose open positions reach margin call level. All customers are however fully responsible for monitoring the activity of their accounts.
The stop out level is the level of your equity where your open positions will be closed automatically. For executive and standard account holders the stop out level is equal to 20% of the margin required. For mini and micro account holders the stop out level is 5%. Please see our Client Trading Agreement for further details.