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Dynamic Margin

Discover how dynamic margin significantly impacts the management of your positions.

What is Dynamic Margin?

Dynamic margin provides a systemic approach to calculating margin requirements, ensuring that the margin rates align with your position size and hedging strategy. It allows for greater flexibility and precision in managing your trading portfolio while maintaining risk management standards.

Key Features of Dynamic Margin

Position Size significance

Position size, or market exposure, is crucial in determining margin requirements. The larger your market position, the more margin you need.

Adaptable margin rules

Dynamic Margin rules apply to all open positions. This means you can have open positions across different markets and still benefit from the lowest margin rates listed below.

Pending Orders

Pending orders that are activated will have their margin requirements modified based on current rates. When the order is executed, the margin reflects these dynamic rates.

Hedged Positions

Hedged positions come with a unique feature— they require only 50% of the margin requirement compared to equivalent unhedged positions.

Managing
Hedged Positions 

When dealing with partially or fully hedged positions, you should keep in mind: The hedge side of a trade can be closed (fully or partially) only if the remaining free equity in the account post-closure is sufficient to cover the revised margin requirements. Alternatively, you may need to top up your account to maintain sufficient equity or close both sides of the hedged trade with realised losses.

Examples of Dynamic Margin

01

Example

A trader holds a long position of 1 lot in a major cross with a $1,000 margin requirement.

  • Under a fixed margin system, the requirement remains fixed at $1,000.
  • With dynamic margin, the requirement is $1,000.

02

Example

A trader holds a short position of 20 lots and a long position of 10 lots in the same market, resulting in a hedged position.

  • Under fixed margin: $20,000.
  • Under dynamic margin: $15,000 ($10,000 for the short position + $5,000 for the hedged position at 50%).

03

Example

A trader holds a long position of 20 lots, then partially hedges by selling 10 lots. Later, the Trader removes the hedge by buying back 10 lots.

  • Initial dynamic margin requirement: $30,000 (1% for the first 10 lots, 2% for the next 10 lots).
  • After hedge placed: $15,000 ($10,000 for short position + $5,000 for hedged position at 50%).
  • Once the hedge is removed: the margin reverts back to $30,000.

Dynamic Margin Rates by Asset

Forex

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Indices

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Commodities

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Disclaimer

Taurex is the trading name of Zenfinex Global Limited.

Zenfinex Global Limited is registered in the Republic of Seychelles with registration number: 8428731-1 and is regulated by the Financial Services Authority of Seychelles (license number SD092). Its registered office address is F20, 1st Floor, Eden Plaza, Eden Island, Seychelles, and its physical office address is Unit G, F28 Eden Plaza, Eden Island, Republic of Seychelles.

Risk Warning: Trading in financial instruments carries a high level of risk and may not be suitable for all investors. The value of your investments may fluctuate and you may lose all of your invested capital, especially due to leverage. You should carefully consider your investment objectives, level of experience, and risk tolerance before deciding to trade in financial instruments that may be on margin. It is your responsibility to ensure that you fully understand the risks involved and seek independent advice if necessary.

You are strongly advised to obtain independent financial, legal and tax advice before proceeding with any trading activity or engaging in copy trading. Nothing in this site should be read or construed as constituting advice on the part of Taurex or any of its affiliates, directors, officers or employees.

Clients must be at least 18 years old to use Taurex’s services.

Residence: The information on this site is not directed at residents of the United States, Canada, North Korea, Iran, Belgium, Japan or any particular country and is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.

Taurex is the trading name of Zenfinex Global Limited, registered in the Republic of Seychelles.

Registered Office Address: F20, 1st Floor, Eden Plaza, Eden Island, Seychelles, and its physical office address is Unit G, F28 Eden Plaza, Eden Island, Republic of Seychelles.

Regulated by the Financial Services Authority under license number: SD092

Registration No: 8428731-1

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