The use of leverage is the relative use of the total authorized free trading line and is a function of the Equity and the used margin. It is displayed at the bottom of the platform main window, as a percentage of the total margin and rounded down to the nearest integer. As exposure increases, the free margin shrinks and the use of leverage increases.
It is also depends of profit and loss since profit and loss drives equity which in turns determines the total free margin.
All else being equal, profits increase equity. An increasing equity increases the total margin available for trading. An increasing total margin decreases the use of leverage, assuming the net exposure remains the same. The reverse is true for losses.
The clients must always keep in mind that the use of leverage magnifies losses as well as profits. Equity can easily and quickly vanish in situations where the market prices exhibit strong volatility, potentially creating an adverse environment for the highly leveraged participant. The maximum authorized leverage is the leverage factor attributed to the account.
It defines the margin necessary to take and maintain exposures. A leverage factor of is attributed by default to all retail and standards accounts at account opening 1: This value might be changed upon written request in the limits of the maximum authorized some other limitations might apply.
The maximum authorized leverage attributed to large equity basis accounts is determined along with the client, before the account opening. The margin is defined by the equity and by the leverage authorized to the portfolio.
Necessary margin to take and maintain an exposure is computed, and updates the free trading line. The clients have still some flexibility with respect to the management of their exposure in the margin call territory: Two margin modes are possible: The process is automated and performed at the server level.
The system offsets position s in every instrument in which there is an exposure. From this point, the client owns the decision making as to decrease further the exposure, cover it entirely, or keep it. The clients must be aware of the consequences of keeping hedged exposures, especially regarding the swap processing, and order management. Based on these considerations, the clients are encouraged to merge their positions after a margin cut event.
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