How does trading on margin work with FXCM?
FXCM offers leveraged trading on FX/CFDs and Spread Bets with margin.
Margin can be thought of as a good faith deposit required to maintain open positions. This is not a fee or a transaction cost, it is simply a portion of your account equity set aside and allocated as a margin deposit. Margin requirements (per 1k lot for FX and minimum contract size for CFDs) are determined by taking a percentage of the notional trade size plus a small cushion. A cushion is added to help alleviate daily/weekly fluctuations.
FXCM accounts will utilize a Tiered Margin system which consists of an Entry /Maintenance margin and a Liquidation margin.
Entry / Maintenance Margin – The initial good faith deposit or collateral set aside to open and then maintain a position. On the Trading Station platform the exact amount of margin required to open a position can be viewed in the "MMR" column under the "Simple Dealing Rates" tab or in the "Used Maint Mr" column under the "Accounts" tab.
Liquidation Margin (Minimum Required Margin) - If your account equity falls below this level, all positions are closed.
It is important to note that FXCM offers two main trading platforms, FXCM Trading Station and MT4, and liquidation policies slightly differ depending on the platform and account that you choose.
On a Trading Station account when your usable margin is less than 0, you will receive a Margin Call. Trading Station Margin call’s close all open positions at the best available price immediately.
On an MT4 account when your margin level is less than you 50% you will receive a Margin Call. MT4 Margin Calls liquidate positions one by one, in order of current biggest losing position first (in terms of p/l) until the Margin Level is greater than 50%.