Leverage & Margin.
Understand how leverage works and how margin requirements affect your positions. Leverage allows you to gain exposure to a market by committing only a portion of the total value of a position as margin. Because CFDs are leveraged products, relatively small movements in the underlying market can have a significantly larger effect on the value of your position. Leverage can magnify both profits and losses and should therefore be used with a clear understanding of the risks involved.
What is Leverage?
Leverage is the ratio between the total value of a transaction and the amount of margin required to open and maintain that transaction.
The leverage available to you may vary depending on:
- The underlying instrument
- Prevailing market conditions
- Your client classification
- Applicable regulatory requirements
Applicable leverage ratios may be adjusted during periods of increased volatility or reduced market liquidity.
What is Margin?
Margin is the amount of funds that must be allocated and maintained in your trading account in order to open and keep a leveraged position open.
When you trade using leverage, you are not required to commit the full notional value of the transaction. Instead, a percentage of the position value is required as margin.
Example - If a CFD position has a notional value of $10,000 and the applicable margin requirement is 5%, the margin required to open that position would be $500.
Illustrative example only. Actual margin requirements vary by instrument, market conditions and client classification.
Maintaining Sufficient Margin
Clients are responsible for monitoring their account and maintaining sufficient margin to support their open positions. If the margin level in an account falls below the applicable threshold, Briana Global may, without prior notice, transmit instructions for some or all open positions to be closed through the relevant Liquidity Provider. Such positions may be closed at unfavorable prices, particularly during periods of market volatility, gapping or reduced liquidity.
Margin Close-Out
A margin close-out may occur when the equity available in your account falls below the margin level required to maintain your open positions. Where the applicable threshold is reached, some or all positions may be closed automatically to reduce further exposure.
Market Conditions May Affect Leverage
Available leverage and margin requirements are not necessarily fixed. Briana Global may adjust applicable leverage, including reducing leverage, where market conditions warrant it. This may occur during periods of:
- Significant market volatility
- Reduced liquidity
- Material market events
- Increased risk associated with a particular underlying asset
The Risk Disclosure specifically provides for leverage to be varied under these circumstances.
Negative Balance Protection Protection for Retail Clients
Briana Global extends Negative Balance Protection to Retail Clients as a separate client-protection measure. Where the protection applies, a Retail Client's liability is limited to the funds deposited into and credited to the account. If the account balance falls below zero due to extreme market volatility, gapping or other qualifying circumstances, the balance will be reset to zero within a reasonable period. Negative Balance Protection is subject to the Terms and Conditions and does not apply in circumstances involving fraud, abusive trading conduct, manipulation of the Platform or breach of the Terms. It does not apply to Professional Clients unless otherwise agreed in writing.
The Risks of Leveraged Trading
Trading CFDs using leverage involves a high degree of risk. A relatively small movement in the price of an underlying asset can result in a substantially larger movement in the value of your CFD position. Losses may therefore exceed the margin initially allocated to an individual transaction. Retail Clients benefiting from Negative Balance Protection remain exposed to the risk of losing all funds deposited into their trading account. Professional Clients may not benefit from Negative Balance Protection and may therefore face greater potential liability.
Before You Trade
Before using leverage, make sure you understand:
- How leverage affects your exposure — Higher leverage increases the impact that market movements can have on your account.
- Your margin requirement — Different instruments may have different margin requirements.
- Your available margin — You are responsible for maintaining sufficient funds to support your open positions.
- The risk of margin close-out — Positions may be closed where your margin falls below the applicable threshold.
- Your client classification — Certain protections, including Negative Balance Protection, differ between Retail and Professional Clients.
CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money. Trading Contracts for Difference (CFDs) and Forex involves a high level of risk to your capital and can result in losses that exceed your initial deposit. These products may not be suitable for all investors.
Read the Risk Disclosure.
Understand the material risks associated with leveraged CFD trading.