Leverage, Margin & Getting Stopped Out

This is the page most people are nervous about, because leverage has a scary reputation. By the end of it you’ll see it’s just a way to use your money efficiently, and that the part with the frightening name, the stop-out, is there to protect you.

1. 1

   Leverage

   For every $1 of yours, you control $200 of trade.

   1:200

2. 2

   Initial margin

   A portion of your funds, held to open the trade.

   US$140

3. 3

   Maintenance margin

   The least equity you must keep to hold it open.

   US$70

4. 4

   Stop-out

   If your equity falls below that, the trade is closed for you.

   auto-close

   Safety brake

Leverage: doing more with less of your cash

• Leverage lets a small amount of your money control a larger trade. With 1:200 leverage, every $1 of yours controls $200 of trade.
• You don’t have to tie up all your cash in one position — put up a little and open a trade worth far more.
• Think of it like a deposit on a house. You don’t pay the full price up front to control the whole property; you put down a fraction and control the rest.

Initial margin: the part held to open

• Initial margin is the part of your money set aside to open the trade. It isn’t a fee and it isn’t gone — it’s held as a deposit, then released back to you when you close.
• Initial margin = position size ÷ leverage.
• Example: one lot of the Nasdaq 100 at 28,000, on 1:200 leverage → US$28,000 ÷ 200 = US$140 held.

At 1:200 leverage, US$140 of your own money holds open a US$28,000 trade.

Maintenance margin and your equity

• Your equity is your account’s live value right now — your balance, plus or minus the profit or loss on any open trade.
• Maintenance margin is the least equity you need to keep a trade open. It’s half of the initial margin.
• As a trade moves against you and your equity falls, the maintenance margin is the line you don’t want to cross.

Stop-out: the safety brake

• If your equity falls below the maintenance margin, the platform closes the trade for you. That automatic close is the stop-out.
• It isn’t a punishment. It’s a brake that stops a losing trade before it can run away from you.

Full Example

Example: one lot of the Nasdaq 100 at 28,000, on 1:200 leverage.

	Figure
Position size	US$28,000
Leverage	1:200
Initial margin (28,000 ÷ 200)	US$140
Maintenance margin (half of that)	US$70
Stop-out	when your equity drops below US$70

Three steps to run before any trade:

1. Work out the initial margin — position size ÷ leverage. Here, US$28,000 ÷ 200 = US$140.
2. Halve it for the maintenance margin — the least equity that keeps the trade open. Here, US$70.
3. Note the stop-out level, and keep enough funds to sustain the trade. If your equity drops below US$70, the platform closes it for you.

Leverage isn’t the same on every market

We recommend setting up your account at 1:200, but that’s a ceiling — each instrument has its own leverage, and many are lower. As a rough guide:

Market	Typical leverage
Major forex pairs	1:200
Gold and metals	1:200
Most indices	1:200
Hong Kong 50	1:100
Popular stocks	up to 1:20
Most other stocks	1:10
BTC/USD	1:20

• A lower leverage just means more of your own money is held as initial margin to open the same-sized trade.
• You don’t have to memorise any of this. How to pull up the exact leverage and fees for any market is coming up, on your trading terminal.

Next come the fees, and you’ll see there are only three of them.