Leverage & Margin

Q: What are the different types of leverage?

There are two main types of leverage:Fixed Leverage: Fixed leverage requires a constant margin deposit, regardless of market direction.Variable Leverage: Variable leverage changes with market direction. This can be beneficial if you believe the asset price will rise, but it can also be risky if the asset price moves against your position.

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OW Markets Leverage || الرافعة المالية الخاصة OW Marketd

What is Leverage?

When it comes to trading CFDs on forex and other financial instruments, leverage is considered a fundamental tool. It gives you the chance to use small capital to strike a deal that needs much greater capital.
This way, the leverage enables you to loan out money from a trading broker so as to open larger trades.
For example, if your account balance is only USD 100, when you use a leverage of 1:1000, your account purchasing power will become USD 100,000
That’s to say, the leverage allows you to snowball the purchasing power of your account balance in order to enter into larger trades with ease.
At the same time, however, leverage is considered a very dangerous instrument. Although it gives you the chance to blow up your profits, this also means that if you are not cautious enough regarding how to use your liquidity and how to invest it, leverage may result in doubled losses.
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What is Margin?

It is the amount you are required to deposit to open a trade using leverage.
Margin is calculated as a percentage of the trade value. For example: If you have a leverage of 10:1 and open a trade of 1,000 USD, the required margin will be 100 USD (10% of 1,000 USD).
When a trader buys an asset using margin, he/she places an initial deposit (usually a percentage of the asset value) with the broker. The remainder represents a loan from the broker. Interest is charged on this loan, which the trader must repay to the broker.
It should be noted that this type of trading is done in non-Islamic accounts or those that charge overnight interests. While in Islamic accounts, no interest is added, making them Sharia-compliant.

OW Markets brings you a wide variety of revolutionary trading tools.

We provide you with dynamic leverage of up to 1:1000, which automatically adapts and adjusts based on your trading volumes, empowering you to maximize your trading potential. Dynamic leverage is applied differently across each financial instrument. Here is a simplified explanation of how dynamic leverage adjusts to trading volumes and the difference between dynamic and traditional leverage.

Example

What is the required margin to open 26 standard lots of the EUR/USD pair using dynamic leverage compared to a regular account with a leverage of 1:200?

The market price of EUR/USD = 1.1022 (One standard contract equals 100,000 units)

Traditional leverage usually relies on a single pattern; it enables you to use a fixed leverage regardless of the varying sizes of your trades, which sometimes limits your ability to open more positions.

26 Lots @ 200 Leverage

Margin Required Formula:

Required Margin = Number of Lots * Contract Size * Market Price / Leverage

26 * 100,000 * 1.1022 /200 = 14,328

Required Margin = $14,328

So, if your account balance is $30,000, the required margin represents 47.76% of your account due to the size of the open lots and the trading tool.

It would cost you $14,324 to open 26 Lot

26 Lots with Dynamic Leverage would be split between:

5 Lot @ leverage 1000 = $551

20 Lot @ leverage 400 = $5,511

1 Lot @ leverage 200 = $551

Required Margin = $6,613

Dynamic Leverage saved you $7,715

So, if your account balance is $30,000, the required margin represents 25.72 % of your account due to the size of the open lots and the trading tool.

Once you enter the markets, Dynamic Leverage automatically adjusts your leverage and margin based on your open position.

It would cost you $6,613 to open 26 Lot

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Dynamic leverage and Margin Requirements

Dynamic leverage is applied differently depending on each financial instrument. Below is a simplified explanation of how dynamic leverage adapts to trading volumes

fxFX Majors

Lots	Leverage	Margin %
from 0.01 to 5.00	1:1000	0.10%
from 5.01 to 25.00	1:400	0.25%
from 25.01 to 50.00	1:200	0.50%
from 50.01 to 100.00	1:100	1.00%
100.01 Up	1:50	2.00%

No symbol found

fxFX Minors

Lots	Leverage	Margin %
from 0.01 to 5.00	1:500	0.20%
from 5.01 to 25.00	1:400	0.25%
from 25.01 to 50.00	1:200	0.50%
from 50.01 to 100.00	1:100	1.00%
100.01 Up	1:50	2.00%

No symbol found

fxFX Exotics

Lots	Leverage	Margin %
from 0.01 to 2.00	1:200	0.50%
from 2.01 to up 50.00	1:100	1.00%
50.01 Up	1:50	2.00%

No symbol found

cmtXAU

Lots	Leverage	Margin %
from 0.01 to 2.00	1:400	0.25%
from 2.01 to 5.00	1:200	0.50%
from 5.01 to 20.00	1:100	1.00%

No symbol found

cmtXAGUSD

Lots	Leverage	Margin %
from 1.00 to 5.00	1:50	2.00%
from 5.01 to 10.00	1:25	4.00%

No symbol found

cmtXPTUSD, XPDUSD

Lots	Leverage	Margin %
from 0.01 to 2.00	1:200	0.50%
from 2.01 to 25.00	1:100	1.00%
25.01 Up	1:50	2.00%

No symbol found

djiIndices Spot

Lots	Leverage	Margin %
from 0.1 to 10.00	1:400	0.25%
from 10.01 to 50.00	1:200	0.50%
from 50.01 to 300.00	1:100	1.00%
300.01 Up	1:50	2.00%

No symbol found

djiIndices Future

Lots	Leverage	Margin %
from 0.01 to 5.00	1:200	0.50%
from 5.01 to up 30.00	1:100	1.00%
30.01 Up	1:50	2.00%

No symbol found

Energies

Lots	Leverage	Margin %
from 0.01 to 5.00	1:200	0.50%
from 5.01 to up 30.00	1:100	1.00%
30.01 Up	1:50	2.00%

No symbol found

c Crypto

Lots	Leverage	Margin %
from 0.01 Up	1:50	2%

No symbol found

FAQs

leverage is a financial tool that allows traders to amplify their trading positions using borrowed capital. It enables traders to control larger positions in the market with a smaller amount of capital. For example, with a leverage ratio of 1:500, a trader can control a position worth $500,000 with just $1,000 of their own capital. While leverage can magnify profits, it also increases the potential for losses. Traders should use leverage cautiously and be aware of the risks involved, as it can lead to significant gains or losses depending on market movements.

Leverage is a financial trading tool that allows investors to trade with larger amounts of capital than they actually have in their accounts. Leverage works by using secured loans provided by the broker, enabling the investor to access greater liquidity and open larger trading positions by depositing only a small percentage of the total trade value.

Increased Profit Potential: Leverage can help you make greater profits on your investments. For example, if an asset's price rises by 10%, you'll make a 100% profit if you use 10:1 leverage.

Use Less Capital: You can use leverage to open larger trades using less money. This can be beneficial if you have limited capital.

There are two main types of leverage:

Fixed Leverage: Fixed leverage requires a constant margin deposit, regardless of market direction.

Variable Leverage: Variable leverage changes with market direction. This can be beneficial if you believe the asset price will rise, but it can also be risky if the asset price moves against your position.

Margin is equity from your account set aside by OW Markets to maintain a position when you’re trading on leverage.

You can calculate the required margin using the following formula:

Required Margin = Trade Size × Contract Price × (1 / Leverage)

For example: if you want to open a trade worth $1,000 using 10:1 leverage, the required margin would be:

Required Margin = $1,000 × $1 / 10 = $100

Margin Call: This is a notification from your broker indicating that you need to deposit additional funds into your account or close your position. It occurs when the price of an asset drops significantly, causing the value of your margin account to fall below the required minimum level.

Leverage is a feature that allows traders to control larger positions than the amount of capital they have in their accounts. In other words, it enables traders to open trades with more money than they actually possess.

Trade size refers to the amount of currency being bought or sold in a single deal. The standard trade size is 100,000 units of the base currency.