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Margin & leverage

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Leverage

Leverage is like a lever effect that allows you to move large amount of money with a small amount of money.
In a typical transaction, a $1,000 can only be used as $1,000, but FX transaction with a leverage ratio of 50:1 you can use 50 times the amount of the funds, $50,000. Using Leverage make you get a big profit on your ufor operating a large amount of money with a small amount of money, you can make a big profit on your investment, but the risk of loss increases. This means that if the exchange rate moves as expected, the profits will increase by 50 time, but if the market is moving contrary to expectations, the losses will also increase by 50 times.

Margin

Margin is deposit money that you deposit a certain amount as collateral when you open an account for FX transaction.
Because FX transaction allows you to trade ‘within the money you put in collateral’, the amount of deposit money is treated separately from the transaction price and, instead of exchanging all of the deposit money, you can exchange only the gains and losses on the transaction by applying Leverage.

Actual Required Margin would change by Leverage Level

Leverage Amount Traded Required Margin
1:1 $100,000 $100,000
50:1 $100,000 $2,000
100:1 $100,000 $1,000
200:1 $100,000 $500
500:1 $100,000 $200

Change of leverage

Account Equity Amount Leverage Level Leverage Level Exposure
Classic STP Account $100,000 ~ 200:1 No leverage change
Raw STP Swiss 11 $100,000 ~ 200:1
Raw STP Swiss 8 $100,000 ~ 200:1
Raw STP Swiss 5 $100,000 ~ 200:1

*All symbols including Minor & Exotic Pairs have different leverages and is proportional to the leverage of account.