Forex Margin Trading
Forex is traded on margin. This means that you can leverage your investment by opening positions of larger size than the funds you have available to place as collateral. Margin means the amount of funds (i.e. cash provided to Saxo) reserved on your trading account to cover any potential losses from open FX (or other margined products) positions.
Margin requirements differ by currency pair and depend on the exposure in the currency pair. Margin requirements may be subject to regulatory mandated minimums, and may be subject to change according to the underlying liquidity and volatility of the currency pair. For this reason, the most liquid currency pairs (the majors) in most cases require a lower margin requirement.
Saxo offers tiered margin methodology as a mechanism to manage political and economic events that may lead to the market becoming volatile and changing rapidly. With tiered margin, the average margin requirement (‘Blended Margin Requirement’) increases with the level of exposure. The opposite is also true; as the level of exposure decreases the margin requirement also decreases. This concept is illustrated below:
The different levels of exposure (or tiers) are defined as an absolute number of U.S. Dollars (USD) across all currency pairs. Each currency pair has a specific margin requirement in each tier. A complete list of margin requirements by currency pair can be viewed here as well as in the SaxoTrader platforms, under Trading Conditions.
Please note that margin requirements may be changed without prior notice. Saxo reserves the right to increase margin requirements for large position sizes, including client portfolios considered to be of high risk.
To create a buffer between your trading capacity and the market-standard margin close-out level, we apply two different margin requirements:
- Initial margin: a pre-trade margin check at time of order placement, i.e. on opening a new position there must be sufficient margin collateral available on account to meet the initial margin requirement.
- Maintenance margin: a continuous margin check, i.e. the minimum amount of margin collateral that must be held on account to maintain an open position(s). Maintenance margin is used to calculate the margin utilisation.
A complete list of margin requirements by currency pair can be viewed here as well as in the SaxoTrader platforms, under Trading Conditions.
Margin Trading carries a high level of risk to your capital with the possibility of losing more than your initial investment and may not be suitable for all investors.
Ensure you fully understand the risks involved and seek independent advice if necessary.
See our Risk Warning.
Key Information Documents
All trading carries risk. To help you understanding the risks involved we have put together a series of Key Information Documents (KIDs) highlighting the risks and rewards related to each product. Read more
Additional Key Information Documents are available in our trading platform.