Margin & Leverage
Discover the margin and leverage conditions offered by backtrader.com. We provide clients with the flexibility of trading with leverage ratios of up to 500:1. This empowers traders to amplify the scope of what's at stake.
What are Margin & Leverage?
M&L
Similar to collateral, the margin is the amount of money required to be deposited into a trading account to open a trade, which is usually a fraction of the underlying market cost. Leverage results from using borrowed capital as the source of funds, allowing traders to gain access to larger sums of capital. However, the use of leverage is a double-edged sword, heightening profits and losses at the same time.
Amplify Trades with Margin and Leverage at backtrader.com
BackTrader flexible leverage of up to 500:1, as well as live risk exposure management. We have a mandatory 50% margin close-out rule, a margin call level as low as 100%, and provide our clients with negative balance protection. BlackTrader clients can enjoy the opportunity to magnify the potential of their trades.
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What is Margin and How is it Calculated?
Similar to collateral, the margin is the amount of money required to be deposited into a trading account to open a trade, which is usually a fraction of the underlying market cost.
Long example: Buying GBP/USD
A trader buys 1 contract of GBP/USD (one contracts equals 100,000 GBP) at $1.2650
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If GBP/USD rises to $1.2800 (+150 pips) the trader could exit for a profit around $1,500
- (# contracts x contract size) x exit price - entry)
- (1x 100,000) x (12800 ~ 1.2650) - $1,500
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If the price falls to 12600 the trader could exit for a loss around -$500
- (#8 contracts x contract x (exit price - entry)
- (1x 100,000) x (61.2600 - $1.2650)
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At 40011 leverage, just 0.25% of margin ($316.25) is required to open the trade
- (# contracts x contract size x price) / leverage
- 1x 100,000 x 1.2650) / 400
Short example: Selling USD/JPY
A trader sells 5 contracts of USD/JPY (one contracts equals 100,000 USD) at ¥10725
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IF USD/JPY falls to ¥106 50 (-75 pips) the trader could ‘exit for a profit around $3.500
- (# contracts x contract size) x (entry ~ exit price)
- (5 x 100,000) x (106 50 ~ 10725) - ¥375k ($3,500)
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If the price rises to ¥107.70 the trader could exit for a loss around -S2,100
- (# contracts x contract) x (entry - exit price)
- (5 x 100,000) x ($12600 - $12650) « -¥225k ($2.100)
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At 400 leverage, just 0.25% of margin ($316.25) is required to open the trade
- (# contracts x contract size x price) / leverage
- (1x 100,000 x 10728) / 400 » ¥134 01k ($316 25)
What is Leverage and How is it Calculated?
Leverage results from using borrowed capital as the source of funds, allowing traders to gain access to larger sums of capital. However, the use of leverage is a double-edged sword heightening profits and losses at the same time,
Take as an example a $5000 forex trading account with 100:1 leverage. If $2,000 is used to trade forex on margin with 100:1 leverage, the trader will have exposure of $200,000 in base currency. To calculate exposure use the following equation: Margin × Leverage = Exposure Consequently: $2,000 margin × 100 leverage = $200,000 of exposure in base currency
Margin Call
backtrader.com offers clients a margin call level of 100%. This means that when a client's margin level (equity/margin falls to 100%, the client will receive an email to notify them that they do not have sufficient funds to support their open positions
Stop-out Level
backtrader.com's stop-out level for clients is 50% This means that when the margin level falls to 50% (equity/ margin), open positions would be automatically closed until the margin level goes above 100%, Trades will be closed in order of largest to smallest, until the margin level (maintenance margin) is at 100% or greater
Dynamic Leverage Function
The dynamic leverage function will be operational on all trades opened on forex and gold CFDs.
Leverage Levels at backtrader.com
Starting from 22nd of March 2021, the dynamic leverage function has been utilized at backtrader.com for both BlackTrader and gold products. The default leverage levels and the corresponding account balances can be seen in the table below:
| BlackTrader and Gold Dynamic Leverage Function | |
|---|---|
| Account Balance Tiers | Leverage |
| $5,000-$19,999 | 500:1 |
| $20,000-$49,999.99 | 300:1 |
| $50,000-$99,999.99 | 200:1 |
| $100,000 and above | 100:1 |
With BlackTrader and Gold products, the dynamic leverage function works as follows:
The default leverage level starts at 500:1.
Leverage levels will be automatically reduced if the realized account balance rises to a higher account balance tier.
However, leverage levels will not automatically increase if the realized account balance falls to a lower account balance tier.
To increase leverage levels, clients need to apply directly within the backtrader.com client portal.
With other asset classes, leverage levels are fixed at
| Other Asset Classes Leverage Levels at backtrader.com | |
|---|---|
| Asset Classes | Leverage |
| Silver and Energies | 100:1 |
| Share Indices | 100:1 |
| Commodities | 100:1 |
| Cryptocurrencies | 20:1 |
* Please note that backtrader.com reserves the right to adjust leverage at any time.
* Please take into consideration the impact of leverage levels on your trading.
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