FXCM Ltd (UK) Micro – FAQ

1) What are the new margin requirements?

To view a full list of margin requirements visit the MARGIN TABLE.

2) When will the NEW margin requirements take effect?

At trading open on Sunday, November, 22nd.

3) Will my account be affected by this change?

All Micro accounts held with Forex Capital Markets Ltd (FXCM UK) will be affected by the new margin requirements.

• All positions and orders established after November 22nd will be subject to the new margin requirements.

• Additionally, open trades and active orders initiated prior to November 22nd will also be subject to the new margin requirements.

4) Why is FXCM changing the way margin requirements are set?

At FXCM we strongly believe that utilizing high levels of leverage can be very dangerous and not in the best interest of our traders. We have often seen a few loosing trades offset many winning trades.

FXCM’s experience in Hong Kong, where significantly lower leverage levels (higher margins) are mandated by law, suggests that trading with lower leverage may assist clients in trading more successfully over an extended time period. The new margin requirements we have put in place are intended to reduce risk by restricting traders from using excessive leverage.

5) Why Is Lower Leverage Important?

The combination of high leverage and volatile currencies can be extremely dangerous. Accounts that trade the most volatile pairs, such as GBP/USD and GBP/JPY, with the maximum amount of leverage tend to have less positive performance. On the other hand, traders that focus on less volatile currency pairs, such as USD/JPY and AUD/USD, and use more conservative leverage may benefit from the reduced risk that accompanies trading on lower leverage. When trading volatile currencies with high leverage, one bad trade can wipe out the profits from many good trades. By trading with less leverage, a trader can reduce the risk of a big drawdown from one bad trade.

6) How Do The New Margin Levels Compare to Other Markets?

In the U.S. equity markets, most traders are limited to using 2:1 leverage in their trading. Another way of stating this is that a minimum of 50% of the notional transaction size is required as margin. Additionally, as of this writing, the initial margin requirement on a $125,000 EuroFX futures contract (EUR/USD) is about $4,725. That’s roughly a 4% initial margin requirement or roughly 25:1 leverage.

7) Will my positions be margined out?

That depends on how much leverage you are utilizing when the new margin requirements take effect. We have put together a few guides to help you determine if you have sufficient margin to prevent positions from being liquidated.

You can WATCH THIS VIDEO to see exactly what steps we recommend taking.

We have also outlined the steps discussed in the above video for you here:

1) On a piece of paper, write down the trade details for each trade you currently have open

• Include the currency pair and the trade size, like this: EUR/USD 1,000 (1,000 = 1 lot)

2) Next, write down the NEW margin requirement for each trade

• For example, EUR/USD 1,000 $16

3) Next, multiply the NEW margin requirement by the number of lots traded

• For example, $16 X 1 lots = $16

4) Finally, add up all of the new margin levels that you just calculated. This number is your NEW used margin (USD MR). Subtracting this from your equity will give you your usable margin (USBL MR).

* Remember, when your usable margin (USBL MR) drops below zero your live trades are triggered to be liquidated.

8) Where do I find up-to-date margin requirements?

Up-to-date margin requirements are displayed in the Simplified Dealing Rates window of the trading platform by currency pair.

To access the simple dealing rates window:

• Login to the FXCM Trading Station II platform

• Click on the Simple Dealing Rates tab within the dealing rates section of the platform (typically in the top left-hand corner of the platform)

• The margin requirements will be listed by currency pair from the MMR column (the values listed represent the minimum margin required for each 1K lot traded).

9) How are margin requirements set?

After November 22nd, the default margin levels for FX products will be 0.25% of the notional trade size plus a small cushion to prevent daily or even weekly fluctuations in margin requirements. In most cases, the cushion we have added means that margin levels should not change more than once a month. Additionally, to further keep things simplified, margin levels will only go up or down in increments of $1.

Margin requirements are subject to change without notice based on fluctuating rates. When it becomes necessary for margin requirements to change, we will attempt to notify clients by sending a pop-up message via the trading station at least 24 hours prior to the change.