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Margin Requirements

Transactions conducted in the SWFX marketplace may be done on a margin trading basis, enabling a client to execute trades larger than the deposit, amplifying price movement effect. The multi-instrument exposure of the account is limited by the total trading line which is calculated by multiplying the Equity of the account by the leverage agreed with Dukascopy Bank SA. By default the initial leverage for regular trading hours is set to 1:100, which allows to increase exposure up to a 100 times the amount of the equity, but can be set up to 1:200 by request (restrictions may apply).

Attention: ECN accounts with the leverage 1:300 and minimum equity level 20 EUR are available with Dukascopy Europe. (Read more)

The initial leverage of the account can be adjusted to different levels (e.g. 1:50 or 1:20) which are predefined by Dukascopy Bank SA and the client. The margin necessary to increase the exposure is computed at trade initiation, and the amount of Free and Used Margin is updated in real time on the trading platform.

Minimum margin requirements

In order to protect clients from incurring liability above their equity and protect Dukascopy Bank SA from associated risks, the following minimum margin policy applies: The minimum equity requirement for the self-trading account is 20 CHF. For accounts with different base currency the minimum amount of equity is calculated at the exchange rate of the latest settlement. All open positions may be closed and the account may be blocked should the equity on the account reach the minimum margin requirement.

The minimum margin required to open a position depends on the desired leverage, instrument and current market prices.

Special Margin Requirements

Due to specific trading conditions following instruments have higher margin requirements (lower leverage):

Instrument Description Margin requirements Leverage
BRENT.CMD/USD UK Brent Oil 1% 1:100
LIGHT.CMD/USD US Crude Oil 1% 1:100
GAS.CMD/USD Natural Gas 1% 1:100
COPPER.CMD/USD High Grade Copper 1% 1:100
AUS.IDX/AUD Australia 200 Index 1% 1:100
ESP.IDX/EUR Spain 35 Index 1% 1:100
EUS.IDX/EUR EU Stocks 50 Index 1% 1:100
DEU.IDX/EUR Germany 30 Index 1% 1:100
HKG.IDX/HKD Hong Kong Index 1% 1:100
FRA.IDX/EUR France 40 Index 1% 1:100
CHE.IDX/CHF Switzerland 20 Index 1% 1:100
GBR.IDX/GBP UK 100 Index 1% 1:100
JPN.IDX/JPY Japan 200+ Index 1% 1:100
USA30.IDX/USD US 30 Index 1% 1:100
USATECH.IDX/USD US 100 Tech Index 1% 1:100
USA500.IDX/USD US 500 Index 1% 1:100
EUR/DKK Euro vs Danish Krone  10% 1:10
USD/DKK US Dollar vs Danish Krone  10% 1:10
USD/RUB US Dollar vs Russian Ruble 10% 1:10
USD/CNH US Dollar vs Chinese Yuan  10% 1:10
USD/HKD US Dollar vs Hong Kong Dollar 10% 1:10
CAD/HKD Canadian Dollar vs Hong Kong Dollar 10% 1:10
EUR/HKD Euro vs Hong Kong Dollar 10% 1:10
HKD/JPY Hong Kong Dollar vs Japanese Yen 10% 1:10
TRY/JPY Turkish Lira vs Japanese Yen 10% 1:10
ZAR/JPY South African Rand vs Japanese Yen 10% 1:10
EUR/RUB Euro vs Russian Rouble 10% 1:10

Maximum available leverage for weekends and other off-market days equals to the lowest value of the over-the-weekend leverage (1:30 for the accounts with top leverage 1:100 and 1:60 for the accounts with top leverage 1:200) or to special margin requirements of the instrument or trading account.

Attention: Special margin requirements (leverages) remain in place disregards of clients requests for maximum leverage increase.

* The minimum margin requirements will differ if the initial leverage is changed
** See section "Over-the-weekend leverage" for additional information about weekend leverage
*** 1:300 leverage is available for Dukascopy Europe clients only
If equity for the self trade account is less than CHF 100 or equivalent in foreign currency, the account may be blocked by Dukascopy Bank.

Use of leverage

The Use of Leverage is an indicator showing how much of the collateral is currently used by the exposure on the trading account. It is displayed in percentage in real-time and calculated as follows:

  Used Margin  
Use of leverage =                                 x 100
  Equity  

*Note that the Used Margin equals to the exposure divided by leverage

Example:
Position of 1 mio EURUSD at 1.2000
Exposure on the account = USD 1,200,000
Profit and losses = 0
Leverage authorized for the account = 1:20
Equity = USD 100,000
Used Margin = Exposure on the account / Leverage = USD 1,200,000 / 20 = USD 60,000
Use of leverage = Used Margin / Equity = 60,000 / 100,000 = 60%

Margin call and margin cut policy

Margin call (Use of leverage >100%) means a situation where the margin requirements do not allow the client to increase exposure on his account. The client may only execute trades to reduce exposure, by closing or hedging the existing net positions. Despite the margin call level being reached, the positions will not be closed automatically. The automated system will cancel all placed bid/offer orders that can increase the exposure.

Margin cut or cut-off level (Use of leverage ≥ 200%) - if the Use of Leverage reaches or exceeds 200%, Dukascopy Bank has the right (but not the obligation) to fully or partially reduce the client's exposure by closing existing positions and/or by opening new positions in the opposite direction. Usually the system automatically reduces exposure so that the Use of Leverage is brought to approximately 100%. However, traders can select to fully close all open positions in case of a margin cut.

 Use of leverage Description
0% No exposure
<100% Normal status
≥100% Margin call: trader is not able to increase exposure on the account if the Use of leverage is more than 100%
≥200% Margin cut: typically system will open hedging positions in the opposite direction for all positions which contribute to exposure on the account. The Use of leverage will be decreased to 100% or less.
Over-the-weekend leverage

Maximum available leverage for the weekends and other market closure days is set to 1:30 (1:60 for accounts with maximum leverage 1:200). The purpose of this policy is to mitigate risks caused by potential price gaps during market closure, which may seriously threaten invested funds.

Standard algorithm: Over-the-weekend trading conditions are effective starting 3-4 hours before each market closure (weekend, holidays, etc) until re-opening of the market. For usual Friday night closure, over-the-weekend conditions would become effective at 18:00 [GMT], which may cause the Use Of Leverage to increase if there is an net exposure. Regardless of the over-the-weekend margin conditions, the general execution mechanisms of the margin call and margin cut remain the same. That is, if the amount of equity on the account is not sufficient to support existing positions with a leverage of 1:30, the margin cut procedure will be applied to the account (see paragraph Margin Call and Margin Cut).

Maximum instrument exposure

Maximum net exposure of each currency pair on one trading account is limited to a position of 25 million of primary currency. For precious metals and CFDs maximum net exposure is specified in the table below:

Instrument Maximum exposure in contracts (for CFDs) /
Oz (for precious metals)
BRENT.CMD 650
LIGHT.CMD 650
GAS.CMD 4 500
COPPER.CMD 8 000
USA500.IDX 1 400
USATECH.IDX 650
USA30.IDX 160
DEU.IDX 250
GBR.IDX 350
FRA.IDX 600
AUS.IDX 750
JPN.IDX 20 000
HKG.IDX 1 000
CHE.IDX 350
ESP.IDX 300
EUS.IDX 900
XAU/USD 17 000
XAG/USD 160 000

Clients may request to wave/increase the maximum exposure limit.
In this case the account leverage will be reduced to 1:20 (1:10 over-the-weekend).
The exposure limits come into effect as of 09-Sep-2016.

Stock CFD Maximum Instrument Exposure

Maximum exposure per single stock CFD is 100,000 USD or equivalent in other currencies. Clients may request to increase maximum exposure to 250,000 USD, in this case leverage will be reduced to 1:2 from default setting of 1:10. Clients may request to increase leverage to 1:20. In this case maximum exposure per CFD will be 50,000 USD. Over-the-weekend leverage reduction rules do not apply to single stock CFDs.

Market Maximum exposure
for a share CFD
Austria
100,000 EUR
Belgium
100,000 EUR
Denmark
750,000 DKK
Finland
100,000 EUR
France
100,000 EUR
  Germany
100,000 EUR
Netherlands
100,000 EUR
Norway
900,000 NOK
Portugal
100,000 EUR
Spain
100,000 EUR
Sweden
950,000 SEK
Switzerland
100,000 CHF
UK
90,000 GBP
US
100,000 USD

Risk disclosure

Trading on margin carries a high level of risk, and may not be suitable for all investors. It is highly recommended to maintain the Use of Leverage at normal levels. The client must always keep in mind that leverage increases potential loss, as well as potential profit, and invested funds can quickly suffer losses in situations where the market prices exhibit strong volatility, potentially creating an adverse environment for the highly leveraged participant. The client shall be solely responsible for maintaining sufficient margin in relation to the existing positions.

To learn more about Dukascopy Bank SA ECN Accounts, please write us: [email protected], call us: +41 22 799 4888 or alternatively ask for a call-back.

 


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