Margin & Leverage FAQs
- Can I trade on margin (or leverage) at Ally Invest Forex?
- What are margin and leverage?
- What are the margin requirements at Ally Invest Forex?
- Is margin in forex trading different from stock trading?
- Are there disadvantages to trading on leverage?
- How can I prevent liquidation of my open positions?
- How do I change the leverage in my Ally Invest Forex account?
- Will I be notified if I am on margin call?
Can I trade on margin (or leverage) at Ally Invest Forex?
Yes, you can trade on margin here at Ally Invest Forex. This means that you aren’t required to deposit cash for the full value of your position. Remember increasing leverage, increase risk.^top
What are margin and leverage?
Margin and leverage are concepts that go hand-in-hand in currency trading. Trading “on margin” means you need only deposit a percentage of the total funds required for a trade. Similarly, a deposit can be leveraged so that you can trade positions significantly larger than the amount you have in your account. These small movements can result in larger profits, or larger losses when compared to an unleveraged position.
Because small price movements can potentially have large effects on your account, trading on margin (or with leverage) can be risky.^top
What are the margin requirements at Ally Invest Forex?
Margin requirements vary by currency pair. For a list of margin requirements please click here.^top
Is margin in forex trading different from stock trading?
Yes, there are 3 main differences:
- Forex trading can offer up to 50 to 1 margin versus 2 to 1 for stock trading. Learn about Ally Invest Forex’s margin requirements.
- In stock trading, you pay your brokerage firm interest on the amount you borrow. Ally Invest Forex does not charge interest on the leveraged amount
- When trading stock on margin, you are subject to “margin calls” – mandatory requests to supplement your cash deposit, should the position move against you.
Ally Invest Forex does not engage in margin calls, and requires 100% maintenance margin at all times to help ensure that you don’t lose more money than you deposited.^top
Are there disadvantages to trading on leverage?
While leverage enables you to control a large amount of capital with a limited cash deposit, it can also expose you to significant losses.^top
How can I prevent liquidation of my open positions?
There are several proactive measures that you can employ to help prevent liquidation and manage risk:
- Actively monitor the status of your open positions.
- Specify a stop-loss order for each open trade to limit downside risk. You can specify the stop-loss rate at the time you issue a trade, or add a stop-loss order at any time for any open trade. You can also change your stop-loss orders at any time to take current market prices or other conditions into account. The use of stop loss orders may not necessarily limit your losses.
- Keep your account funded in excess of your required margin. These extra funds act as a cushion, protecting you if the market moves against you. If you are in danger of breaching your margin limits, either incrementally reduce the size of your position or add funds to your account as soon as possible.
- Employ lower leverage. You may request a leverage change at any time.
How do I change the leverage in my Ally Invest Forex account?
You can submit a request to adjust your leverage by logging into ForexTrader and accessing MyAccount. You can request margin of 50:1, 20:1 or 10:1.. Please note that you can only submit a request to lower your leverage.^top
Will I be notified if I am on margin call?
Ally Invest Forex does not engage in margin calls. However, your open positions may be liquidated if your account balance falls below 100% of the required margin. Our systems continuously monitor your available margin and will automatically close out positions on your behalf.^top