Dynamic Leverage temporarily reduces the leverage available for opening new positions during certain market periods. As a result, more margin is required to open a trade of the same size, which may affect your available trading volume.
What happens when a lower leverage limit applies?
When a lower leverage limit applies:
- More margin is required: Opening a position of the same size requires more margin and reduces the trading volume you can open with your available funds. This uses more of your available margin and leaves less buffer to absorb adverse market movements.
- Your order may be rejected: If your trading account has insufficient free margin, you may be unable to open a new position. This can prevent you from entering trades or adjusting positions during volatile periods.
How much margin is required during dynamic leverage?
For example, you want to open 1 lot of XAU/USD (Gold). Under normal conditions, your leverage is 1:500, but it is temporarily reduced to 1:100 during a Dynamic Leverage period.
Normal Conditions | Dynamic Leverage Period | |
|---|---|---|
Leverage | 1:500 | 1:100 |
Required Margin | USD 800 | USD 4,000 |
In this example, the required margin increases from USD 800 to USD 4,000, even though you are opening the same position size.
If your trading account has insufficient free margin to meet the increased requirement, your order may be rejected.
Note: This example is for illustration purposes. Actual margin requirements depend on the trading product and applicable trading conditions.
Actual margin requirements may vary depending on market prices, contract specifications, account currency and the applicable leverage.
Higher margin requirements reduce the amount of free margin available to absorb adverse market movements. Existing positions remain exposed to market fluctuations and applicable margin requirements.
Dynamic Leverage does not eliminate the risk of losses or guarantee that positions will remain open.
