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In Finance, Leverage is borrowing money to supplement existing funds for investments in such a way that the potential positive or negative outcome is magnified and/or enhanced.
For example, trading on leverage is like buying a home. When you want to buy a house with a mortgage, it means you don’t have enough money to buy the property out right. If you put a 20% deposit on a house worth $200,000 and make regular payments to the bank. You are using a smaller amount of money ($40,000) to control a larger asset ($200,000 house).
In Forex, trading on a leverage allows you to lever up your purchases.
As far as EGM Securities' clients are concerned the amount of leverage on their accounts will in part determine the amount of funds they need to put up front for a trade.
EGM Securities' clients have the option of using a system of floating leverage on their accounts. Floating leverage is based on current open positon and will decrease as the size of open positions increases. EGM Securities' floating leverage criteria is as follows:

Floating Leverage
EGM Securities uses a ‘Floating Leverage’ system which automatically applies the maximum leverage available on a trade by a trade basis depending on the client’s trade volume in USD.

Nominal value of open position in USDMaximum leverage offered
First USD 6Million1:400
Next USD 2 Million1:300
Next USD 2 Million1:100
Next USD 5 Million1:50
Remaining1:33

  • Nominal Value of open position = Number of lots x Contract size
  • Example: Open positions over 15 Million USD nominal value, the first 6M will carry a leverage of 1:400, the following 2M carries a leverage of 1:300, the following 2M carries a leverage of 1:100, the following 5M carries a leverage of 1:50, and everything above 15M carries a leverage of 1:33.

IMPORTANT:
The nominal value is in the first currency pair, to calculate the required margin you will need to convert the nominal value to USD, then convert the total to your account currency at the current exchange rate.

How to calculate the required margin with the Floating Leverage:

Nominal Value of open position in USDMaximum Leverage offeredFunds required to open (Required Margin)
First USD 6 Million1:400= 6,000,000 / 400
= 15,000 USD
Next USD 2 Million1:300= 2,000,000 / 300
= 6666.66 USD
Next USD 2 Million1:100= 2,000,000 / 100
= 20,000 USD
Next USD 5 Million1:50= 5,000,000 / 50
= 100,000 USD
Remaining1:33

= XXXX / 33 
= XXXX USD

1:33


Example 1:

You are buying or selling 120 lots of GBPUSD.
Your trading account currency is USD.
GBPUSD spot rate is 1.35661.

  • Nominal Value of the position = 120 x 100,000 = 12,000,000 GBP
  • Nominal Value of the position in USD = 12,000,000 x 1.35661 (GBPUSD spot rate) = 16,279,320
  • The margin required is calculated as per the below:

Nominal Value of open position in USD is: USD 16,279,320Maximum Leverage offeredFunds required to open (Used Margin)
First USD 6,000,0001:400= 6,000,000 / 400
= 15,000 USD
Next USD 2,000,0001:300= 2,000,000 / 300
= 6666,66 USD
Next USD 2,000,0001:100= 2,000,000 / 100
= 20,000 USD
Next USD 5,000,0001:50= 5,000,000 / 50
= 100,000 USD
Next USD 1,279,3201:33= 1,279,320 / 33
= 38,767.27 USD
Total Required Margin in USDUSD 180,433.93
Total Required Margin on your trading accountUSD 180,433.93


Since your trading account currency is USD, the required margin for that position is USD 180,433.93
If your account currency is in a different currency, then you will need to convert the margin required to your account currency.
Example 2:
You are buying or selling 90 lots of EURGBP.
Your trading account currency is CHF.
EURUSD spot rate is 1.02762. USDCHF spot rate is 1.00751.

  • Nominal Value of the position = 90 x 100,000 EUR = 9,000,000 EUR
  • Nominal Value of the position in USD = 9,000,000 EUR x 1.02762 (spot rate of EURUSD) = 9,248,580 USD
  • Margin required is calculated as per the below:

Nominal Value of open position in USD is: 9,248,580 USDMaximum Leverage offeredFunds required to open (Used Margin)
First USD 6,000,0001:400= 6,000,000 / 400
= 15,000 USD
Next USD 2,000,0001:300= 2,000,000 / 300
= 6,666.66USD
Remaining USD 1,248,5801:100= 1,248,580 / 100
= 12,485.80 USD
Total Required Margin in USD

USD 34,152.46

Total Required Margin on trading your account in CHF

CHF 39,687.74


Since your account currency is in CHF, you will need to convert the required margin from USD to CHF.
Total Required Margin on your account: 34,152.46 ÷ 1.00751 = CHF 33,897.88

Example 3:
You are buying or selling 64 lots of XAUUSD (Gold).
Your trading account currency is USD.
XAUUSD spot rate is 1256.80.

  • Nominal Value of the position in USD = 64 x 100 x 1256.80 (XAUUSD spot rate) = USD 8,043,520
  • The margin required is calculated as per the below:

Nominal Value of open position in USD is: USD 8,043,520Maximum Leverage offeredFunds required to open (Used Margin)
First USD 6,000,0001:400= 6,000,000 / 400
= 15,000 USD
Next USD 2,000,0001:300= 2,000,000 / 300
= 6,666.66 USD
Remaining USD 43,5201:100= 43,520/ 100
= 435.20 USD
Total Required Margin in USDUSD 22,101.86
Total Required Margin on your trading accountUSD 22,101.86


Since your trading account currency is USD, the required margin for that position is USD 22,101.86.