Margin policy

FX and metals are traded “on margin” which means you can undertake transactions having an economic exposure multiple times your deposit size. The ability to do this is known as “leverage” which can substantially magnify the size of your loss but may also increase your profit (relative to unleveraged trading, ie, physical share ownership) for any given price change of the underlying currency pair.

Atom8 grants you a trading line which sets a maximum currency exposure for your account. We calculate it by multiplying your Equity by your Leverage Factor (up to 100 times, in the normal course).

The default maximum initial leverage for regular trading hours is 200:1, permitting you to gain exposure up to a 200 times the amount of your Equity. We may at our discretion consider different limits in specific cases, upon request.

We have discretion to reduce Leverage to (e.g. 50:1 or 20:1) which we, for example, consider such change to be prudent, taking into account current macro-economic conditions, volatility and market stress and/or relevant political or financial events or news announcements.

We compute your margin at trade inception and the amount of Free and Used Margin is updated in real time on the trading platform.

Minimum margin requirements

Minimum margin levels are set to (a) protect you from the risk of loss in excess of your Equity; and (b) Atom8’s associated liquidity position as follows:

  • An individual self-trade account, a minimum Equity of £200.00 is required.
  • For accounts with different base currency the minimum amount of equity is calculated at the exchange rate as of the latest settlement.
  • All open positions may be closed and the account blocked if the Equity reaches below the minimum margin requirement.

The minimum margin required to open a position depends on the desired leverage, currency pair and current market prices.

*** If Equity for a self-trade account falls below GBP500.00 or equivalent in foreign currency, the account may be automatically blocked by the trading risk management system.

Use of Leverage (Only applies to Atom8 Trader [java] Platforms)

The Use of Leverage indicator on your Platform shows how much of your deposit is currently used by your open position(s)’ aggregate net Exposure.It is displayed in percentage in real-time and calculated as follows:

*Note that the Used Margin equals to the exposure divided by leverage

Example:

Trader enters a EUR 1 million notional trade on the EURUSD at 1.2000

Exposure on the account = USD 1,200,000

Profit and losses = 0

Leverage authorised for the account = 20:1

Equity = USD 100,000

Used Margin = Exposure on the account / Leverage = USD 1,200,000 / 20 = USD 60,000

Use of Leverage = Used Margin / Equity = 60,000 / 100,000 = 60% Alternatively expressed, the trader has a 20:1 trading line against a deposit of USD 100,000, hence USD2m maximum exposure. If he opens a trade with a USD 1.2m exposure, he is currently using 60% of his trading line. That is his 60% Use of Leverage.

Margin Call and Margin Cut Policy (Only applies to Atom8 Trader [java] Platforms)

Margin Call (Use of Leverage >100%) means a situation where the margin requirements do not allow you to increase Exposure on your account. You may only execute trades to reduce exposure, by closing or hedging the existing net positions. Despite the margin call level being reached, the positions will not be closed automatically. The automated system then cancels all placed bid/offer orders that can increase the Exposure.

Margin cut or cut-off level (Use of leverage ≥ 200%) If the Use of Leverage reaches or exceeds 200%, Atom8 has the right (but not the obligation) to fully or partially reduce your Exposure by closing existing positions and/or by opening new positions in the opposite direction. In the normal course, the system automatically reduces exposure so that the Use of Leverage is brought down to approximately 100%. However, you can select to fully close all open positions in case of a margin cut.

Use of LeverageDescription
0%No exposure
<100%Normal status
>100%Margin call: trader is not able to increase exposure on the account if the Use of Leverage exceeds 100%
>200%Margin cut: typically system will open hedging positions in the opposite direction for all positions which contribute to Exposure on the account. The Use of Leverage will be decreased to 100% or less.

 

Over-the-weekend leverage (only applies to Atom8 Trader [java] Platforms)

Maximum available leverage for the weekends and other market closure days is set to 30:1 (or equivalent ratios for accounts having leverage set other than at 100:1). The purpose of this policy is to mitigate risks caused by potential price gaps during market closure, which may seriously threaten deposited funds.

Standard algorithm: Over-the-weekend trading conditions are effective starting 3-4 hours before each market closure (weekend, holidays, etc…) until re-opening of the market. For usual Friday night closure, over-the-weekend conditions would become effective at 18:00 GMT, which may cause the Use of Leverage to increase in respect of any net Exposure. Regardless of the over-the-weekend margin conditions, the general execution mechanisms of the Margin Call and Margin Cut remain the same. That is, if the amount of Equity on the account is insufficient to support existing positions with leverage of 30:1, the Margin Cut procedure will be applied to the account (see paragraph Margin Call and Margin Cut).

Risk Disclosure

Trading foreign exchange on margin carries a high level of risk, and may not be suitable for all investors. It is highly recommended to maintain the Use of Leverage at normal levels.You must always keep in mind that leverage increases potential loss, as well as potential profit, and deposited funds can quickly suffer losses in situations where the market prices exhibit strong volatility, potentially creating an adverse environment for the highly leveraged participant. You are solely responsible for maintaining sufficient margin in relation to the existing positions on your trading account.

To learn more about Atom8 trading accounts:

  • please email us at: info@atom8.com
  • call us on:+44 (0)20 7043 5050 or
  • make a Call Me Back request here

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