The required margin for overseas FX trading on HFM (HotForex) is related to the maximum leverage and the amount deposited, so I will explain it in this article. If you are trading with MT4 or MT5, you will come across the term “required margin”. This term is common, but those who have just started trading may not understand it, so I will explain the meaning of the term and how to calculate it.
What is margin requirement?
Margin requirements refer to the minimum amount that must be deposited in an account. Not only for FX, but also for stocks, if you do not deposit the minimum amount to trade, you cannot trade. This is called “margin requirements.” The margin required for trading varies depending on the leverage. These are important functions for trading operations, so be sure to understand these contents and matters. Depending on your investment objectives, it will affect your strategy. These programs are also introduced by other brokers.
What is trading margin requirement?
The required margin for trading refers to the minimum amount (collateral) required for trading. The required margin for trading varies depending on the leverage of the target currency pair, stock index, precious metals, gold, CFDs, etc. You can check the information from the overview on the official top home page. Log in to the platform and identify the leverage offered before trading. It’s a simple thing to do, so don’t forget. The effective margin can currently be viewed on the tool screen. When placing a new order, it is also necessary to check the news, etc.
Method of calculation
The calculation method for the service assuming a leverage of 1000x is as follows. The required margin for trading can be calculated after calculating the required margin. Credits from campaigns and bonuses are also taken into account. Be careful when clicking on products such as commodities and virtual currencies to place orders. Investors should also check market rates. It is recommended to invest at the right time.
Base price x 1/1000 = required margin
Required Margin x Position Holding Quantity = Required Margin
What is leverage
Leverage is a mechanism that allows you to trade many times larger than your deposited margin. It is also commonly referred to as the “lever principle”. It is a mechanism that allows you to earn a large amount of money with a small amount of margin, but on the other hand, if you raise the leverage too much, there is also the risk of losing a lot of money.
Traders trade based on the required margin. Margin calls and loss cuts are involved in this. These are introduced in the following articles.
Advantages of leverage
The biggest advantage of leverage is that you can trade with an amount many times the amount of your margin, which is your collateral. By using leverage, you may be able to expect large profits even with a small amount of capital. The higher the leverage, the greater the profit. This allows you to make a small amount into a very large amount.
Disadvantages of leverage
The disadvantage is that if a trade fails, you may incur a larger loss than expected. The fact that you can make a small amount into a large amount means that there is an equal chance of losing the entire small amount. When using leverage, it is necessary to set the leverage while assuming cases where losses may occur, so it is better to limit the leverage, especially for beginners.
HFM Leverage Limits
There is a leverage limit in HFM. However, the leverage restriction is only applied when the account balance is above a certain level. It does not apply to small transactions. The maximum leverage is 2000 times. The key point is to trade at a safe size in the market so as not to overdo it. Of course, you should check the official website for economic indicators, etc.
| Leverage | |
| ～$10000 | 2000 |
| $10000～$50000 | 1000 |
| $50000～$300000 | 500 |
| $300000～ | 75 |
Leverage by account
Leverage is 1000x for micro accounts and 500x for premium and zero spread accounts. Please note that different account types have different maximum leverage. HFM’s leverage of 1000x is the highest in the industry, but please note that 1000x leverage cannot be selected except for micro accounts.
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