What is a margin?
A margin is a deposit used as collateral for taking positions in the market. Trading with margin allows you to open positions using leverage thereby increasing your investment power, with only a small percentage of the equity.
What are margin requirements?
Every instrument you trade carries a margin requirement. If the value of the account falls below the minimum margin requirement then additional funds must be added as collateral for each trade, or the open positions will be liquidated.
How is margin calculated?
The margin required for each open position is calculated using the following formula:
Required Margin = (Market quote x Lots) / Leverage
To open a position of 0.10 (10000 base currency) lots of EUR/USD, with a leverage of 1:100, at the current market quote of 1.3750
Required Margin: (1.3750 x 10000) / (1/100) = 137.5 USD
To hold this position open you would be required to keep a minimum of 137.5 USD in your account.
What is a margin call?
A margin call is an alert from the platform, warning you that your account does not have the required equity. At Domino Forex, you will be alerted when your margin reaches 100% that it has slipped below the required margin percentage, and additional funds are needed to secure your open trades.
The Domino Forex margin call level is 100%
What is a stop out level?
A stop out level is the point at which the platform will automatically close your open trades, beginning with the least profitable position, when the margin requirements have not been met. This process continues, until the margin level requirement has been reached. The stop out level serves to lessen the risk of your account incurring losses that result in a negative balance.
The Domino Forex stop out level is 20%