Margin is the amount of collateral to cover any credit risks arising during your trading operations.
Margin is the percentage of position size, and the only real reason for having funds in your trading account is to ensure sufficient margin. On a 1% margin, for example, a position of $1,000,000 will require a deposit of $10,000.
The margin in your trading account needs to be equal to or above 100% in order for you to be able to open new trades.
Using leverage allows you to trade positions larger than the amount of money in your trading account. Leverage is expressed as a ratio, for instance 1:100, 1:300, or 1:2000. Example: If you have $100 in your trading account and you trade ticket sizes of 50,000 EUR/USD, your leverage will equate 50:1.
At DSG you are given a free short-term credit allowance whenever you trade on margin: this enables you to open a transaction with an amount that exceeds your account value. Without this, you are only able to trade based on the amounts you have in your trading account.
DSG reserves the right to apply changes to and amend the leverage ratio (i.e. decrease the leverage ratio), on its sole discretion and without any notice on a case by case basis, and/or on all or any accounts of the client as deemed necessary by DSG.
On the one hand, by using leverage, even from a relatively small initial investment you can make considerable profit. On the other hand, your losses can also become drastic if you fail to apply proper risk management.
DSG provides a leverage range that helps you choose your preferred risk level. We do not recommend trading close to a leverage of 1:2000 due to the high risk it involves.
With DSG you can control your real-time risk exposure easily by monitoring your used and free margin.
Together, used and free margin comprise your equity. Used margin often refers to the minimum amount of money you need to deposit to hold the trade. Free margin is the amount of money you have left in your trading account, and it fluctuates according to your account equity. With free margin, you can open additional positions with it, or absorb any losses.
DSG strictly follows a margin call policy to guarantee that your maximum possible risk does not exceed your account equity. Clients are still fully responsible for monitoring their trading account activity.
As soon as your account equity drops below 60% of the margin needed to maintain your open positions, we will attempt to notify you with a margin call warning you that you do not have sufficient equity to support your open positions.
The stop-out level refers to the equity level at which your open positions are automatically closed. Our stop-out position is at 50%.