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Margin & Leverage

Global Prime offers modest leverage to give traders the best chance of successfully trading some of the most challenging markets in the world.

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Margin & Leverage Rates

Global Prime offers modest margin and leverage rates to traders to give you the best chance at trading success.

We see these as the maximum rates that traders can utilise without being detrimental to their profitability or success. Higher leverage such as 1:500 are not normally offered by ECN brokers like Global Prime.

Leverage rates by market and jurisdiction

 

Australia

ASIC

Seychelles

FSA

Vanuatu

VFSC

Contracting entity Global Prime Pty Ltd Global Prime FX Ltd Gleneagle Securities PTY Limited
t/a Global Prime FX
Leverage restrictions Yes No No
Major Forex pairs 1:30 1:100 1:100
Non-major Forex pairs 1:20 1:100 1:100
Major Indices 1:20 1:100 1:100
Gold 1:20 1:100 1:100
Minor Indices 1:10 1:100 1:100
Commodities 1:10 1:100 1:100
Bonds 1:5 1:100 1:100
Shares 1:5 1:20 1:20
Digital currencies 1:1 1:1 1:1

Margin Call & Stop Out Levels

Margin Call @ 120%

Margin level is calculated by Equity divided by used margin. It is advised that you should either close off positions to free up margin or add additional funds to increase available margin.

Margin Stop Out @ 100%

This means that Equity divided by used margin equals 1. In other words equity has dropped so low that it equals the used margin. The more exposure carried, the higher the risk of a negative balance occurring.

As a broker that sends trades to the market, we are extremely risk averse when it comes to overleveraged accounts which can lead to negative balances. Negative balances can occur if you are holding exposure and the market moves to a new level which leads to a loss on your open positions greater than the balance of your account. The trades are then closed, leaving a negative balance.

It's important to note that if your account balance goes negative you will be required to deposit funds to bring the account balance back to 0. This doesn’t happen very often but if you are hovering in Margin Call territory then your chances of a negative balance occurring are much higher.

On a B-book broker when an account goes negative, the broker has first of all made the entire deposit as profit and since the clients trades did not go to market the broker doesn't owe that money to a counterparty AKA liquidity providers. With Global Prime if an account goes negative the trades were executed in the real market so we have real exposure with our Prime Brokers and liquidity providers and we would owe that negative balance to those counterparties.

This is obviously something that we never want to see happen and is one of the reasons why we endeavour to contact you when overexposed to ask that you check and reduce your exposure to ensure it doesn’t get to that.

Your questions, answered.

What does ECN mean? Right Arrow

Electronic Communications Networks or ‘ECNs’ are off-exchange execution venues which allow market participants to trade with a range of counterparties anonymously. They are the main trading venues for OTC markets such as Foreign Exchange and Metals.

This basically means ECNs provide the technology and venue for price makers aka ‘liquidity providers’ to distribute their liquidity. Price takers (traders) can see these prices and execute trades against them. The ECN is therefore responsible for prices/quotes and the execution of orders.

See our ECN page for a detailed overview of the Global Prime ECN offering.

What is margin? Right Arrow

Trading a leveraged security means that you have access to far more buying power within the market then your actual balance would allow. A ‘down payment’ or ‘collateral’ of sorts is required in order for us to provide you the leverage you wish to trade with. This ‘collateral’ is what is referred to as margin.

Does Global Prime offer negative balance protection? Right Arrow

Global Prime offers negative balance protection for clients registered with Global Prime Pty Ltd (Australia) regulated by ASIC.

In addition to this, we have protections in place to try to mitigate the possibility for a negative balance. This takes the form of our margin call level at 120% that is designed to provide you with a warning shot that your positions are close to being stopped out which occurs at 100%. This system is in place as a risk mitigation mechanism that is designed to prevent you from going into negative balance on losing trades however, this is not guaranteed and it is possible to go into negative balance even with the margin stop out.

Margin call = warning shot that your positions are close to stop out level, occurs at 120% margin level.

Margin stop out = when equity divided by free margin = 1 ie: when your margin level reaches 100%, your positions will be stopped out in an effort to free up margin and prevent the account balance from going into negative territory.

Does higher leverage = higher losses? Right Arrow

Higher leverage results in the ability to open larger positions than your account balance. Accordingly, higher leverage can result in a higher losing potential including losing more than your initial deposit.

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