Saxo Bank Raising Margin Requirements, Maintains Legal Option for Trade Adjustment

4 stars based on 39 reviews

Margin is a very widely used word in financial terms, but it's unfortunately a word that is often very confusing for people. This is largely because it has a number of different meanings, depending on what context it is being used in. In particular, the meaning of the term as used in forex trading margin requirements for options trading is very different to forex trading margin requirements for options meaning of the term as used in stock forex trading margin requirements for options.

The phrase profit margin is also a common term, and that means something else again. On this page we explain what the term margin means in these different contexts, and provide details of how it's used in options trading. Profit margin is a term that is commonly used in a financial sense in a variety of different situations.

The simplest definition of the term is that it's the difference between income and costs and there are actually two types of profit margin: Gross profit margin is income or revenue minus the direct costs of making that income or revenue.

For example, for a company that makes and sells a product, their gross profit margin will be the amount of revenue they receive for selling the product minus the costs of making that product. Their net margin is income or revenue minus the direct costs and the indirect costs. Investors and traders can also use the term profit margin to forex trading margin requirements for options the amount of money made on any particular investment. For example, if an investor buys stocks and later sells those stocks at a profit, their gross margin would be the difference forex trading margin requirements for options what they sold at and what they bought at.

Their net margin would be that difference minus the costs involved of making the trades. Profit margin can be expressed as either a percentage or an actual amount. You may hear people refer to buying stocks on margin, and this is basically borrowing money from your broker to buy more stocks.

If you have a margin account with your stock broker, then you will be able to buy more stocks worth more money than you actually have in your account.

If you do buy stocks in this manner and they go down in value, then you may be subject to a margin call, which means you must add more funds into your account to forex trading margin requirements for options your borrowings.

Margin is essentially a loan from your broker and you will be liable for interest on that loan. The idea of buying stocks using this technique forex trading margin requirements for options that the profits you can make from buying the additional stocks should be greater than the cost of borrowing the money. You can also use margin in stock trading to short sell stocks. Margin in futures trading is different from in stock trading; it's forex trading margin requirements for options amount of money that you must put into your brokerage account in order to fulfill any obligations that you may incur through trading futures contracts.

This is required because, if a futures trade goes wrong for you, your broker needs money on hand to be able to cover your losses. Your position on futures contracts is updated at the end of the day, and you may be required to add additional funds to your account if your position is moving against you.

The first sum of money you put in your account to cover your position is known as the initial margin, and any subsequent funds you have to add is known as the maintenance margin.

In options trading, margin is very similar to what it means in futures trading because it's also an amount of money that you must put into your account with your broker. This money is required when you write contracts, to cover any potential liability you may incur. This is because whenever you write contracts you are essentially exposed to unlimited risk.

For example, when you write call options on an underlying stock you may be required to sell that stock to the holder of those contracts. If it was trading at a significantly higher price than the strike price of the contracts you had written, then you would stand to lose large sums of money. In order to ensure that you are able to cover that loss, you must have a certain amount of money in your trading account. This allows brokers to limit their risk when they allow account holders to write options because when contracts are exercised and the writer of those contracts is unable to fulfill their obligations, it's the broker with whom they wrote them that is liable.

Although there are guidelines set for brokers as to the level of margin they should take, it's actually down to the brokers themselves to decide. Because of this, the funds required to write contracts may vary from one broker to another, and they may also vary depend on your trading level.

However, unlike the requirements forex trading margin requirements for options trading futures, the requirement is always set as a fixed percentage and it isn't a variable that can change depending on how the market performs. It's actually possible to write options forex trading margin requirements for options without the need for a margin, and there are a number of ways in which you can do this.

Essentially you need to have some alternative form of protection against any potential losses you might incur. For example, if you wrote call options on an underlying stock and you actually owned that underlying stock, then there would be no need for any margin.

This is because if the underlying stock went up in value and the contracts were exercised you would be able to simply sell the holder of the contracts the stock that you already owned. Although you would obviously be selling the stock at a price below the market value, there is no direct cash loss involved when the contracts are exercised.

You could also write put options without the need for a margin if you held a short position on the relevant underlying security. It's also possible to avoid the need for a margin when writing options by using debit spreads.

When you create a debit spread, you would usually be buying in the money options and then writing cheaper out of the money options to recover some of the costs of doing so. Assuming you buy the same amount of contracts as you write, your losses are limited and there is therefore no need for margin.

There are a number of trading strategies that involve the use of debit spreads, which means there are plenty of ways to trade without the need for margin. However, if you are planning on writing options that aren't protected by another position then you need to be prepared to deposit the required amount of margin with your options broker.

In reality, even if you are trading futures options this isn't something you really need to concern yourself with. However, you may hear the term used and it can be useful to know what it is. The SPAN system was developed by the Chicago Mercantile Exchange inand is basically an algorithm that's used to determine the margin requirements that brokers should be asking for based on the likely maximum losses that a portfolio might incur.

SPAN calculates this by processing the gains and losses that might be made under various market conditions. As we have mentioned, it's far from essential that you understand SPAN and how it's calculated, but if you do trade futures options then the amount of margin your broker will require will be based on the SPAN system.

Full Explanation of Margin Margin is a very widely used word in financial terms, but it's unfortunately a word that is often very confusing for people. Section Contents Quick Links. Profit Margin Profit margin is a term that is commonly used in a financial sense in a variety of different situations. Margin in Stock Trading You may hear people refer to buying stocks on margin, and this is basically borrowing money from your broker to buy more stocks. Margin in Futures Trading Margin in futures trading is different from in stock trading; it's an amount of money that you must put into your forex trading margin requirements for options account in order to fulfill any obligations that you may incur through trading futures contracts.

Margin in Options Trading In options trading, margin is very similar to what it means in futures trading because it's also an amount of money that you must put into your account with your broker. Read Review Forex trading margin requirements for options Broker.

Pats price action day trading

  • Options platform cliquet option binary demo and with it options spread trading software

    Optionen handel strategien

  • Bitcoin trading technical analysis

    Binary options trading trend strategy

Qatar trading contracting group

  • Day trading option trading the currency market third edition pdf

    Binary domain faye robot vacuum cleaner

  • Indikatoren fur binare optionen 6028

    Blog player in binary options trading signals

  • 3 binary options robot australia

    Binary option robot results movies

Forex vs affiliate marketing

30 comments Binary signal software free download

Forex trading automatisierte software

By clicking on "Open Demo" you agree to be contacted by representatives of Dukascopy Europe regarding services of Dukascopy Europe and news connected with them. Transactions conducted in the SWFX marketplace may be done on a margin trading basis, enabling a client to execute trades larger than the deposit, amplifing price movement effect. The multi-currency 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 Europe.

By default the initial leverage for regular trading hours is set to 1: In order to protect clients from incurring liability above their equity and protect Dukascopy Europe from associated risks, the following minimum margin policy applies: The minimum equity requirement for the self-trading account is 20 EUR. For accounts with different base currency the minimum amount of equity is calculated at the corresponding 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, currency pair and current market prices. Due to specific trading conditions following instruments have higher margin requirements lower leverage:. Maximum available leverage for weekends and other off-market days equals to the lowest value of the over-the-weekend leverage 1: Special margin requirements leverages remain in place disregards of clients requests for maximum leverage increase.

If equity for the self trade account is less than 20 EUR or equivalent in foreign currency, the account may be blocked by Dukascopy Europe. 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:. However, self-traders can set full close of all open positions in case of margin cut. Maximum available leverage for the weekends and other market closure days is typically set to 1: The purpose of this policy is to mitigate risks caused by potential price gaps during market closure, which may seriously threaten invested funds.

Over-the-weekend trading conditions are effective starting 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 As a result of leverage contraction, the use of leverage can increase if the account has exposure.

Regardless of the over-the-weekend margin conditions, the general execution mechanisms of the margin call and margin cut remain the same. For precious metals and CFDs maximum net exposure is specified in the table below:. In this case the account leverage will be reduced to 1: The exposure limits come into effect as of Sep Trading foreign exchange 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 shall be solely responsible for maintaining sufficient margin in relation to the existing positions.

Send us a message , call us: Welcome to our FX Community: More info about platform: