What are your Margin Call and Stop out Levels?
The margin call and stop out levels are the same for our MT4 and MT5 accounts. You will receive a margin call at 100%, and you will be stopped out at 50% (as per ESMA’s decision).
What this means is that when your equity falls to 100% of the margin required to hold your position, you will receive a warning, i.e. your position will be highlighted red in your MetaTrader platform. If the market continues to move against you and your equity eventually falls further to 50% of the required margin, you will be stopped out of your position. To prevent that from happening you have to either think about closing some of your positions or adding more funds to increase your equity.
EXAMPLE: Let’s assume that you have an open position of 1 lot on USDCHF (the leverage for this pair is fixed at 1:30). The margin will be 100000/30= USD 3333. The margin call on Pro accounts occurs when your equity is at 100% of the margin. Therefore, as our equity becomes equal to our margin, we get a margin call. Furthermore, if your account equity continues to fall further and eventually reaches the point where it becomes equal to 50% of the required margin, your trade will be compulsorily closed (stopped out). Following our example, this will happen when your equity 3333*50%=1666.5 USD.
Here is the basic formula used to calculate margin: Margin=Trade Volume/Leverage. Please note that Trade Volume is calculated depending on the currency of your account. While calculating the trading volume, you need to take the Base currency into account. The Base Currency is the first in a currency pair.
EXAMPLE 1. Let’s assume that you have a trading account in USD and you are going to open a 0.2 lot trade on USDCHF currency pair, which has a leverage of 1:30. The required margin will be: Margin = Trade Volume/Leverage=20 000 (0.2 lot)/30(our leverage)=666USD.
EXAMPLE 2. Now let’s assume that you have a trading account in USD and you are going to buy 0.5 lots of the EURUSD currency pair, which has a leverage of 1:30. Given that the current EURUSD exchange rate is 1.3200, the required margin will be Margin=Trading Volume/Leverage=50 000*1.32/30=22000USD. In this example, we have bought 0.5 lots of EUR, but our account is in USD, that is why we have converted the amount of our trade back to USD – according to the current exchange rate.
Please note that the calculation of the ECN commission is based upon the volume in USD. All trades on ECN accounts are subject to a commission of 3.5 USD per notional trading amount of 100,000 USD. In other words the total amount of commission for a round-turn lot will be 7 USD.
EXAMPLE 1. Let’s assume that you are going to execute a trade of 1 lot size on USDCHF. Considering that 1 lot on USDCHF is equal to 100,000 USD (which is equal to one Standard Lot), the commission will be 7 USD: ECN commission=7*Trade Volume/100 000=7*100 000/100 000=7 USD.
EXAMPLE 2. A trade of 0.5 lot on EURUSD at the exchange rate of 1.3200 will be subject to a commission of 4.62 USD. Since our base currency is EUR and not USD, we will need to convert it to USD by multiplying our lot size by the current exchange rate: ECN Commission=7*Trade Volume in USD/100 000=7*50 000*1.32/100 000 = 4.62 USD. In the example above EUR is the base currency, so 50,000 EUR will be equal to 50,000*1.32=66,000 USD.