FXCM US has introduced a feature called Smart Margin designed to notify you in advance of margin calls, which can give you more time to take action to potentially avoid them. This replaces the old setup where your trades would immediately be liquidated the moment your account fell below the 2% margin level required by US regulations to open forex trades.
How does the Smart Margin Watcher work?
The Smart Margin Watcher is based on two important levels: Initial/Maintenance, and Liquidation Margin. If your account equity falls below this level you will receive a Margin Warning at which point you will no longer be able to place new trades.
Initial/Maintenance Margin
This is the amount that is required to open a new position. It is also the minimum amount required to maintain your open positions.
Liquidation Margin
If your account falls to the Liquidation Margin level, all of your open positions will be liquidated immediately even though you may be in the three day grace period offered by the Maintenance Margin Warning.
How is margin represented in the Accounts window?
[ul]
[li][Equity] is the âfloatingâ value of funds in the account, including profits and losses on open positions.[/li]***
[li][Usd Mr] is Used Margin, the Liquidation Margin Level.[/li]***
[li][Usbl Mr] is Usable Margin. All positions are automatically liquidated when this reaches zero.[/li]***
[li][Usbl Mr %] is [Usbl MR]/[Equity] X 100%. As above, all positions are automatically liquidated when this reaches zero.[/li]***
[li][Usd Maint Mr] is the Usable Margin, the level when a Maintenance Margin Warning is issued.[/li]***
[li][Usbl Maint Mr] is Usable Maintenance Margin. This is the margin deposit available for opening new positions. A Maintenance Margin Warning is triggered when this reaches zero.[/li]***
[li][Usbl Maint Mr %] is [Usbl Maint Mr]/[Equity] X 100%. As above, a Maintenance Margin Warning is triggered when this reaches zero.[/li]***
[li][MC] The letters in the âMCâ column denote the status of the margin call:[/ul]
[/li]âNâ means there is sufficient Maintenance Margin.
âWâ means a Maintenance Margin Warning has been issued.
âYâ means a Margin Call has been issued and positions have been liquidated due to insufficient margin.
When will a Margin Warning or a Margin Call be issued?
If your usable maintenance margin is exhausted, your account locks. Meaning, you canât open trades until you have usable maintenance margin again; you can only close trades. Youâll be notified when this happens via the Trading Station.
What are my options after I receive a Margin Warning?
[ol]
[li]You can close a losing trade so that it stops draining margin from your account, giving you the opportunity to improve your margin level overtime from the returns on your profitable trades.[/li]***
[li]You can deposit funds into your account; and if time is of the essence, debit card deposits are probably your best option since those deposits are credited the quickest.[/li]***
[li]Finally, you can opt to do nothing. You might think that the market is going to turn around and that your losing trades are going to recover their losses. But do not forget, if your trades do not improve and your equity falls below the liquidation margin requirement or if your equity simply remains below the maintenance margin requirement for three days or more, a margin call will occur.
[/li][/ol]
How do I enable Smart Margin on my account?
Smart Margin is enabled by default on new FXCM US accounts. Accounts opened prior to June 14, 2013 may enable the Smart Margin feature by logging into MYFXCM.com and selecting âChange-Margin Requestâ. Similarly, you can disable the feature via MyFXCM.com if you prefer the old setup. Smart Margin Watcher is only available on FXCM US Trading Station accounts at this time.
No matter what you do, Smart Margin gives you more options, and usually more time, to manage your losing trades. You can visit the FXCM US website for more information on Smart Margin including specific examples.
