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By providing your telephone number you agree that CMS Forex UK can contact you by telephone to guide you in the use of your practice account, inform you about our trading products and services and answer any questions you may have.
Simulated conditions may differ from real conditions, and traders should not necessarily expect the same results from live trading.
The Forex market is exciting and accessible to small retail traders because of the industry's high leverage options. Leverage gives a trader the ability to increase the potential return on an investment. Leverage works both ways however; and it also increases potential risk. Therefore leveraging magnifies both gains and losses.
Leveraging a position involves putting down collateral, known as margin, to take on a position that is larger in value. CMS Forex UK offers a maximum leverage option of 400 to 1. This means to take on a standard $100,000 lot or contract, a minimum margin of $250 is required.
How is this possible? In the Forex market, when trading the established currencies that CMS Forex UK offers, the amount that a currency changes in any given day is quite small. A one cent (or approximately 100 pip) change in the value of a currency is considered a large move. Therefore we can afford to hold a fairly small amount of collateral for any given position.
For example let's take a trader with $1,000 in his account. Our trader buys 1 lot of USD/JPY at a price of 97.25 with the 400:1 maximum leverage. His utilized margin is $250. If the position makes money, the gains are added to the equity in the traders account. Likewise if the position goes against the trader the losses are subtracted from the account's total equity. If the price moves 100 pips in the trader's favor (the exchange rate moves upwards one yen to 98.25), then the trader would make a $1,000 profit (at almost $10 per pip × 100 pips). The trader has effectively made a 100% return on his $1,000 account or a 400% gain on his $250 margin. Conversely if the position had gone at least 75 pips against the trader, his position would have been closed due to a margin call when his account equity dropped below his $250 margin requirement. The trader would have a loss of approximately $750, or 75% of his initial account, and about $250 remaining in his account.
To minimize our clients' overall risk exposure the above requirements are calculated on a per-account rather than per-position basis. For example, if you buy 4 lots of USD/JPY and sell 2 lots of USD/CAD, the margin requirement for your account will be $2,250 for those 6 lots. The first 3 lots have a margin requirement of $250 each (at 400:1 leverage), while the next three have a $500 margin requirement (at 200:1). Note the leverage schedule below:
| # of Standard (100K) Lots | # of Mini (10K) Lots
[1 Mini Lot = 0.1 Standard Lots] |
Margin Requirement per Standard (100K) Lot | Margin Requirement per Mini (10K) Lot | Leverage* |
| Option 1(Default) | ||||
| 0 – 3 | 0 – 30 | $250 | $25 | 400 : 1 |
| 3.1 – 10 | 31 – 100 | $500 | $50 | 200 : 1 |
| 10.1 – 50 | 101 – 500 | $1,000 | $100 | 100 : 1 |
| 50.1 & up | 501 & up | $2,500 | $250 | 40 : 1 |
| Option 2 | ||||
| 0 – 50 | 0 – 500 | $1,000 | $100 | 100 : 1 |
| 50.1 & up | 501 & up | $2,500 | $250 | 40 : 1 |
| Option 3 | ||||
| 0 & up | 0 & up | $2,500 | $250 | 40 : 1 |
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*CMS Forex UK is compensated through the Bid/Ask spread.
Leverage magnifies both gains and losses.
‡For qualifying accounts only.