Leverage in a Base Currency

Forex Club offers the following leverage:

  • 100:1 for accounts from $10 to $100,000
  • 50:1 for accounts from $100,000 to 200,000
  • 20:1 for accounts over $200,000
  • Minimum trade size is 1,000 which is equivalent to $10 traded with the maximum leverage ($10x100=1,000).

Leverage in the base currency


  • Simpler and more convenient calculation.
  • While the cost of pip equals in both examples, margin requirement does not.
  • Margin requirement is not influenced by currency fluctuations.
  • No need to worry about funding your account in a certain currency with which you plan to trade.
  • Actual maximum leverage may be more than 100:1, when a base currency has a greater value than the US dollar.
What is leverage in a base currency? It is Forex Club's unique approach to calculating the leverage (buying power), and consequentially margin requirements (how much you need on your deposit to make a trade). There is some disagreement among traders if "leverage in a base currency" approach is advantageous or not in comparison to a traditional way. Let us compare the two and let you be the judge.
Traditional way - leverage in US dollars
Forex Club way - Leverage in a base currency


Common way to calculate leverage is to calculate in some currency, usually US dollar. Most brokers offer leverage of 100:1 in US dollars. Maximum trade size is then calculated as amount in USD x 100. Suppose you decide to purchase 100,000 GBP/USD ($10 per pip). What will be the necessary margin requirement for this trade? To figure this out we need to take current quote for GBP/USD (lets say 2.0285) and do the following:
When you are trading with leverage in a base currency there is a simple rule that you need to remember. When leveraged, each dollar on your deposit = 100 units of any other currency. So if you decide to purchase 100,000 GBP/USD at a rate of 2.0285 you need to have $1,000 on your deposit. By the same token, with $5,000 on your deposit you can purchase 500,000 GBP/USD or 500,000 EUR/USD, or 250,000 GBP/USD and 250,000EUR/USD simultaneously.


(2.0285 *100,000)/100 = $2028.50

Just divide trade size by 100



$2028.50

$1,000

is the amount you need to have on your deposit to purchase 100,000 GBP/USD, when cost of a pip is $10 and when current GBP/USD=2.0285 is the amount you need to have on a deposit to purchase 100,000 GBP/USD, when the cost of a pip is $10 and when current GBP/USD=2.0285



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