Trading Conditions and Leverage Guide

1. What Are Leverage and Margin Trading?

Leverage and margin trading is a way to trade larger positions with a smaller amount of capital.

You only need to set aside part of your funds as margin, and the platform then allows you to trade a larger position size. How much your trade can be amplified depends on the leverage ratio.

Simply put:

• Leverage = Multiplies your trading exposure
• Margin = The principal you put up as collateral

---

1.1 How It Works

① Leverage

Leverage allows you to control assets with a larger notional value while committing less capital, effectively acting as a multiplier.

② Margin

Margin is the deposit you place in order to open and maintain a position.

It is not borrowed money. It is the risk collateral a trader must provide.

③ Leverage Ratio

The leverage ratio shows how many times your margin can be multiplied.

For example:

• 10x leverage -> $1 of margin lets you control $10 of assets.

---

1.2 Examples

Example ①: Stock Trading

You want to buy $10,000 worth of stocks.

Using 10x leverage:

• Required margin: $1,000
• The platform effectively provides the remaining $9,000

In the end, you control the full $10,000 position.

Example ②: Forex Trading

In the forex market:

• Margin is the deposit you must place with the platform when opening a position
• It is not a loan
• Its purpose is to help ensure both parties can meet their obligations

For example, if you trade a $100,000 position with 100x leverage, you only need $1,000 in margin.

---

1.3 Risks and Returns

① Amplified Profits

Because you control the full value of the position, when the market moves in your favor, profits are calculated on the amplified position size rather than on your smaller margin amount.

② Amplified Losses

Likewise, losses are also magnified and may even exceed the margin you initially committed.

③ Risk Management Is Essential

Because leverage magnifies market movements, it also magnifies risk. For that reason, it is strongly recommended that you:

• Set stop-loss orders
• Control your position size
• Monitor your margin level
• Avoid forced liquidation caused by insufficient margin

---

1.4 One-Sentence Summary

Leverage lets you control larger trades with less capital, while margin is the deposit required to do so; it can magnify profits, but it can just as easily magnify losses, so proper use and risk management are critical.

2. What Are the Common Types of Leverage?

In the forex and CFD markets, leverage does not come in just one form. Different platforms or instruments may apply different leverage mechanisms, and these affect both the margin required to open a position and the degree to which your exposure is amplified. The four main leverage categories are as follows:

---

2.1. Account Leverage

① Concept

This is the default leverage set by the platform for your account when it is opened. Unless special rules apply, margin for all trades is calculated based on this leverage.

② Key Features

• Applies uniformly across the entire account
• Does not change with position size
• The most common and easiest type for beginners to understand

③ Example

• Account leverage: 1:100
• Position value: $100,000
• Required margin = $100,000 / 100 = $1,000

---

2.2. Fixed Leverage

① Concept

Some instruments are assigned a fixed leverage by the platform, regardless of the leverage set on your account. This is common for high-volatility products such as gold, crude oil, indices, and periods surrounding major market events.

② Key Features

• Set by the platform and cannot be changed
• Independent of your account leverage
• Used to prevent excessive leverage on higher-risk instruments

③ Example

• Account leverage: 1:500
• Fixed leverage on gold: 1:100
• Opening a $200,000 gold position
• Margin = $200,000 / 100 = $2,000

---

2.3. Dynamic Leverage: High Margin Requirement (HMR)

HMR refers to periods when margin requirements are increased. During these periods, leverage is typically restricted to reduce risk around volatile market events.

Periods of increased margin requirements include:

① News Releases+

During the 15 minutes before and 15 minutes after a major news release, the margin required to open new positions will be increased (HMR).

Please note: the duration of the increased margin period depends on the specific news event. It may also be extended based on risk management decisions.

② Market Close+

Market close periods include weekends, public holidays, and daily market close windows.

In general, margin requirements for the affected instruments will be increased (HMR) during the 3 hours before the market closes and the 1 hour after it reopens. During daily market close periods, the duration of the increased margin window may be shorter.

---

2.4. Tiered Leverage

① Concept

Different position bands use different leverage levels, and margin is calculated separately for each band, much like tiered utility pricing.

② Key Features

• Different leverage applies to different position ranges
• Higher bands usually come with lower leverage
• More precise and commonly used on professional trading platforms

③ Example

• First 10 lots: 1:500
• 10-30 lots: 1:200
• Above 30 lots: 1:100

If you hold 40 lots, your margin must be split into three bands, calculated separately, and then added together.

---

2.5. Instrument Tiered Leverage Table

The table below shows the leverage configuration for each trading instrument in detail:

Notes:

• Account Leverage: ✔ means account leverage applies; ✗ means it does not apply
• Fixed Leverage: ✔ means fixed leverage applies; ✗ means it does not apply
• Dynamic Leverage (HMR): The dynamic leverage ratio during high-risk periods (High Margin Requirement)
• Tiered Leverage: The leverage ratio corresponding to each lot-size band (0-1 lots, 1-2 lots, 2-5 lots, 5-20 lots, 20-50 lots, 50+ lots)