Spot Trading

TRADING SPOT

A spot trade is an investment transaction where immediate payment and delivery of the underlying investment occur. Investors often refer to the spot price, which is the price at which a spot trade is currently valued

Sansom Asset Australia offers different Spot for different tradeable instruments.

  • 30:1 leverage restriction for major currency pairs
  • 20:1 for non-major currency pairs, commodities and major indices
  • 10:1 for commodities other than gold and non-major equity indices
  • 2:1 for cryptocurrencies

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What is Spot?

Margin can be thought of as a good faith deposit required to maintain open positions. This is not a fee or a transaction cost, it is simply a portion of your account equity set aside and allocated as a margin deposit. Margin requirements (per 1k lot for FX and 1 Contract for CFDs) are determined by taking a percentage of the notional trade size plus a small cushion. The cushion is added to help alleviate daily/weekly fluctuations.

Sansom Asset accounts utilize a Tiered Margin system which consists of an Entry / Maintenance margin and a Liquidation margin.

Entry / Maintenance Margin – The initial good faith deposit or collateral set aside to open and then maintain a position. On the Trading Station platform the exact amount of margin required to open a position can be viewed in the "MMR" column under the "Simple Dealing Rates" tab or in the "Used Maint Mr" column under the "Accounts" tab -

Liquidation Margin (Minimum Required Margin) - Generally 50% of the Entry Margin, If your account equity falls below this level, all positions are closed.

Simple Dealing Rates

The Tiered Margin Watcher

Sansom Asset's Tiered Margin Watcher is designed to notify you in advance of margin calls, which can give you more time to take action to potentially avoid them.

Do Margin requirements change?

Margin requirements can periodically change to account for changes in market volatility and currency exchange rates. For example, the margin requirement (MMR) for a specific currency pair is calculated as a percentage of the notional value of such pair. As the exchange rates for any specific currency pair fluctuate up or down, the margin requirement for that pair must be adjusted. As an example, if the Euro strengthens against the US dollar, more margin will be required to hold a EUR/USD position in a US dollar denominated account. Sansom Asset does not anticipate more than one update a month, however extreme market movements or event risk may necessitate unscheduled intra-month updates.

The Trading Station tiered margin system consists of two components:

  1. Initial Entry/Maintenance Margin The initial good faith deposit or collateral set aside to open and then maintain a position. The exact amount of margin required to open a position can be viewed in the "MMR" column under the "Simple Dealing Rates" tab on the Trading Station platform or in the "Used Maint Mr" column under the "Accounts" on the Trading Station platform.
  2. Liquidation Margin (Minimum Required Margin) – The minimum amount of equity that must be in the account in order to continue holding the current open positions on the account. This is set at 50% of the value of the Maintenance Margin. If the account equity falls below this level, all positions will be automatically closed. The exact amount of margin required before automatic liquidation will occur can be found in the "Used Mr" column under the "Accounts" tab on the Trading Station platform.

MetaTrader 4 (MT4) Tiered Margin

Similar to Trading Station II accounts, MetaTrader 4 (MT4) accounts are defaulted to a tiered margin system. MT4 accounts do not use the Smart Margin system, but use a different version of Sansom Asset's tiered margin and margin call procedures. The MT4 Tiered Margin system is designed to allow clients more time in which to manage their positions before the automatic liquidation of those positions occurs. Clients are able to see real-time updates of their margin status on the MT4 platform.

The MT4 platform does not allow Sansom Asset to include commissions in pre-trade margin calculations on client's pending orders. This means that if you place a trade with a small amount of available usable margin under the MT4 account, there is a risk that the execution of the orders could trigger immediate margin call right after the execution as the commission charges can result in insufficient margin to maintain your open positions. You should therefore ensure that you have reserved sufficient buffer usable margin before opening new trades.

The MT4 Tiered Margin system consists of two components:

  1. Entry / Maintenance Margin – The initial good faith deposit or collateral set aside to open and then maintain a position. The exact amount of margin required to open a position can be viewed in the "MMR" column under the "Simple Dealing Rates" tab on the Trading Station platform prior to execution or by viewing the label "Margin" under the "Trade" tab in the MT4 platform.
  2. Liquidation Margin (Minimum Required Margin) The minimum amount of equity that must be in the account in order to continue holding the current open positions on the account. This is set at 50% of the value of the Maintenance Margin and automatic liquidation will trigger when the "Margin Level" label under the "Trade" tab in the MT4 platform reads "50%" or below.

Do Margin requirements change?

Margin requirements can periodically change to account for changes in market volatility and currency exchange rates. For example, the margin requirement (MMR) for a specific currency pair is calculated as a percentage of the notional value of such pair. As the exchange rates for any specific currency pair fluctuate up or down, the margin requirement for that pair must be adjusted. As an example, if the Euro strengthens against the US dollar, more margin will be required to hold a EUR/USD position in a US dollar denominated account. FXCM does not anticipate more than one update a month, however extreme market movements or event risk may necessitate unscheduled intra-month updates.