Margin, Leverage and Rollover, oh my!

Leverage

Leverage is the term used when referring to supersizing your money.

For example: If you have $100, then with 1:100 you can trade 10,000 but with 1:200 then you can trade 20,000.

My broker is going to front me how much?!

In Forex, it seems too good to be true- that we your broker, will front you $100,000 (for example) to trade with when all you have is $1,000. But that’s just how we roll. That, my friend, is what leverage is!

Margin

Margin is referring to the percentage of money in your account needed to fulfill that leverage. You shouldn’t use leverage more than 10 times your account value!

CKFX has a default leverage it applies, but you also have the option to choose your leverage as long as you have the min. requirements. Refer to the table on the accounts page.

Real-world example

If I open 1 lot of 10,000 EUR/USD, my margin requirement is $50. Usable Margin is what’s left over to open new positions or sustain trading losses, depending on how you roll.

Note: We have a mechanism that closes trades BEFORE a customer goes below a ZERO BALANCE, we call it ZERO BALANCE PROTECTION

A customer can never lose more than his deposit

Rollover

Rollover essentially means any currencies you sold will automatically be bought within two business days if you don’t physically do it yourself. So if you sell 100,000 Euros on Tuesday and you don’t pay back by buying the 100,000 Euros by Thursday than as a CKFX service, all your open positions will be automatically “rolled over”.

All open positions are rolled over to the next settlement date at 5:00 pm New York time. Rollover involves exchanging the position being held for a position expiring the following settlement date. The positions being exchanged are usually not valued at the same price. The difference in amount varies greatly based on the currency pair, the interest rate differential between the two currencies, and fluctuates day to day with the movement of prices.

NOTE: When you buy a currency you can leave it open as long as you like.

If you do not want to earn or pay interest on your positions, simply make sure they are closed by 5.00 pm EST, the established end of the market day.