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The new mandatory 50% margin stop loss (new ESMA requirement)

Please note that, in accordance with the recent ESMA requirements, the margin close-out rule will apply to a trade if the 50% margin value is equal to or less than the amount of funds involved in this trade. In this case, the stop loss should be set to the value of the required 50% margin.

For example:
You open a EUR/USD trade of EUR 1,000 with a multiplier of 10.
The effective transaction volume (exposure) in this case is EUR 10,000 (EUR 1,000 * 10).

Considering that trading with EUR/USD is carried out with a leverage of a margin of 30, EURO 333.33 (EUR 10,000 / 30) is required to open this trade.

50% of this margin value is EUR 166.66. This is the value that the stop loss will be set to. In other words, it will be executed when the trade's result becomes EUR 833.33 (EUR 1,000 - EUR 166.66).

How to calculate the parameters of the trade when we would like to use a higher stop loss?


Let’s suppose that we would like to use the maximum possible stop loss level equal to the stop out level (100% for all instruments except shares; -80% applies in the case of shares).

To do this, we will need to set the parameters of the trade so that the 50% margin required for opening our trade would be equal to or higher than the initial trading amount.

Please consider the example below:

Let’s suppose that the initial trading amount is 250 euros, and the instrument is Gold (the leverage for Gold is 20)

If 50% of the margin is 250 euros, then 100% will be 500 euros.

We have to multiply the margin of 500 euros for the maximum leverage on Gold, this being 20. This allows us to then find the amount of the effective transaction volume, which is 10,000 euros (the so-called exposure).

By dividing this volume by the initial trade amount, in this case 250 euros, we find the value of the multiplier, which is to be set to open a trade with a 100% stop loss. The multiplier value is therefore 40.

Please note that, as the transaction parameters change, the platform automatically displays prompts for the available conditions.

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