Margin & Leverage

Leverage

The maximum leverage that FXCBS provides to its traders & investors is 1:100, where margin is calculated as 1% of the base currency on Standard & Pro Accounts. Leverage is provided to clients and investors in order to maximize their ROI on their capital.

Physical Trading (Leverage 1:1)	Leverage Trading (Leverage 1:100)
Client Buys € 100,000.00 at the rate of 1.25000.	Client Buys € 100,000.00 (using only € 1,000.00 Euros due to leverage) at the rate of 1.25000.
Therefore the client exchanged $ 125,000.00 for € 100,000.00 .	Therefore the client exchanged $ 125,000.00 for € 100,000.00 .
After a period of time the rate of Euros against the Dollar has incremented to the level of 1.30000 .	After a period of time the rate of Euros against the Dollar has incremented to the level of 1.30000 .
Therefore client exchanges the € 100,000.00 back to US Dollars at the rate of 1.30000 .	Therefore client exchanges the € 100,000.00 back to US Dollars at the rate of 1.30000 .
€ 100,000 x 1.30000 (Rate of EUR/USD) = $130,000.00 .	€ 100,000 x 1.30000 (Rate of EUR/USD) = $130,000.00 .
Profit = Final Value - Initial Value $5000 = $130,000 - $ 125,000	Profit = Final Value - Initial Value $5000 = $130,000 - $ 125,000
ROI = (Increment in Investment x Percentage) / Initial amount of Investment ROI = ($5,000.00 x 100) / $125,000.00 = 4%.	ROI = (Increment in Investment x Percentage) / Initial amount of Investment ROI = ($5,000.00 x 100) / $1,250.00 = 400%.

Margin

FXCBS provides its esteemed clientele with straight through processing with Major Banks and liquidity providers. Investors & traders are required to hold 1% Margin in their accounts to sustain their open exposure in the market. Please note that the Margin is calculated on base currency values.

EUR/USD

What Does BUY 1 Lot of EUR/USD Mean?

1 lot of EUR/USD means that a client bought 1 standard contract of 100,000 Euros and sold the equivalent of this contract in US Dollars.

In an example where the rate of EUR/USD = 1.2500 , a client would need to exchange $125,000.00 in order to buy 1 standard contract of € 100,000.00 , how do we calculate the margin requirement?

Margin is calculated based on the Base Currency, therefore to buy/sell 1 lot of EUR/USD you have to have Free Margin of the equivalent in base currency of the quoted currency.

Further explanation:

Things to consider (Leverage is 1:100, Margin is 1% & EUR/USD rate is 1.2500) , 1 lot of standard contract of EUR/USD = € 100,000.00 Euros. In order to find the equivalent is Dollars, we have to multiply the Contract size in dollars. Therefore 1 lot of EUR/USD = 125,000.00 .

Margin Calculation

As Margin is 1% of the Base Currency. 1/100 x Dollar Margin requirement , 0.01 * $ 125,000.00 = $1250.00 . Therefore client have to have a minimum of $1, 2500.00 in order to be able to buy/sell this position.

Another example on GBP/USD

Client wants to open a 4 mini contacts (40,000 base currency) = 0.4 Lots. At the rate of GBP/USD = 1.5000 (£ 40,000.00 = $60,000.00) . Therefore after margin calculation , 1/100 * $60,000 = $600 . Therefore client have to have a minimum of $600 in order to be able to buy/sell this position.