Margin Requirements
To ensure that an investor can carry the risk in the case where the position results in a loss, banks or clearing firms typically require sufficient collateral to cover those losses. This collateral is referred to as margin.
Al Shuaib International, through its authorized Clearing Firms, provides margin trading facilities. This essentially allows you to control a large position with a relatively modest investment. Margin trading is essentially borrowing money in order to increase the amount you can invest in a currency. It is like using the brokers money to increase the overall profit margins on a trade and potentially generate strong returns relative to the initial investment.
Margin requirements are intended to help protect the firms and their customers from some of the risks associated with leveraging investments by requiring customers to either meet or maintain certain levels of equity in their account.
It is important to always keep in mind that:
- A customer must maintain the minimum Margin Requirement as specified by the clearing firm on all their Open Positions at all times.
- The Clearing firm has the right to liquidate any or all open positions whenever the minimum Margin Requirement is not maintained.
- Margin requirements are subject to change at any time. In order to prevent any confusion, Al Shuaib International and the corresponding clearing firm, at its best effort, will inform customers about any projected changes on Margin Requirements by email and via the messaging system of the trading platform at least 48 hours before changes are implemented.
- Customers are responsible for placing their own Stop Loss Orders in order to minimize their losses.
Risk Warning
Trading off-exchange foreign exchange on margin carries a high level of risk and is not suitable for all investors. Trading on a margin basis means that any market movement will have a proportionate effect on your deposited funds. This can work for you as well as against you. The possibility exists that you could sustain a total loss of initial margin funds. Trading platforms are designed to automatically liquidate all open positions if your margin deposit is in jeopardy so that you cannot lose more than the funds you have on deposit in your account. It is encouraged that you employ such risk-reducing strategies as 'stop-loss' or 'stop-limit' orders, but you should be aware that market conditions may make it impossible to close out your order at the level specified.