Some may have noticed that new NFA rules on US based accounts took affect today effectively increasing margin requirements. Maximal leverage on the major pairs is now 100:1. Thus, if you had a 200:1 leverage before, your margin requirements have doubled.
Do you anticipate that it will change the way you trade? If so, how and why?
It’s even a little more complicated than I realized. Just checked an email from IBFX:
Trading: NFA Margin Requirement
The new 1% margin requirement is calculated by taking the Notional value of the base currency and converting it to USD. The base currency is defined as the first currency listed in the pair. For example a standard lot for the EUR/USD at a price of 1.5100 would have a notional value of 151,000 USD. Your margin requirement would be 1,510 or 1%.
For example:
Lot Size Standard Mini Micro Nano
1.00 $1,508.90 $150.89 $15.09 $1.51
For pairs with the USD as the base currency (excluding the USD/SGD & USD/ZAR)
Example: USD/JPY
Lot Size Standard Mini Micro Nano
1.00 $1,000.00 $100.00 $10.00 $1.00
-IBFX
How I see this affecting some traders is that they will now be entering into margin call territory a lot sooner than before.
Margin requirements potentially double or quadruple and margin call risk goes up? No!
The notional thing is an interesting adjustment as I believe previously some brokers employed margin based on units rather than position value. That could rattle a few traders.
So, lets say that I had a 200% margin level yesterday (not that I did), but now today, it is 100% margin level because of the new rules, how does not increase my risk of a margin call?
Not trying to be argumentative, just want to understand it.
I should ask them about that. I can change it but don’t see a way to save the change. It always reverts back to 20:1 it hasn’t been a problem because I don’t over extend myself, but psychologically it might be nice to have a little extra margin cushion.