Trading FX on Margin - 100:1
Put simply, 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.
Essentially when you trade on margin you are using a free short-term credit allowance from AxiTrader. This short-term credit allowance is used to purchase an amount of currency that greatly exceeds your account value.
Let's take the following FX example
You have an account with $10,000 with AxiTrader. You trade ticket sizes of 1,000,000 AUD/USD. This equates to a margin ratio of 1% ($10,000 is 1% of $1,000,000). How can you trade 100 times the amount of money you have at your disposal? The answer is that AxiTrader temporarily gives you the necessary credit to make the transaction you are interested in making. Without margin, you would only be able to buy or sell tickets of $10,000 at a time. On standard accounts AxiTrader applies a minimum 1% margin.
This margin facility allows you to potentially make large profits from a relatively small initial investment but it must be pointed out that any losses are equally multiplied.
Customers who hold FX positions may become liable to pay margin as detailed in our terms and conditions. All FX positions have an initial margin and you are required to keep this over and above any unrealised losses. Margin calls can be made at any time and it is therefore important for you to familiarise yourself with our terms and conditions especially the section relating to margin calls. Be aware that it is your responsibility, not AxiTrader's, to monitor your positions and make any margin payments as they become due.
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