Order Sizes
On the ForexPremium trading platform all trades are executed in standard sizes of 100,000 units of the base currency per one lot. There is no maximum trading volume on the ForexPremium Trading Station, however, for trading sizes larger than $10 million, traders must request a quote over the telephone.
Margin Requirement
ForexPremium enables currency trading to be conducted on a highly leveraged basis ( up to 100:1 leverage! ). You are able to select the degree of leverage or gearing that you wish to employ in trading. Unless you specify otherwise, ForexPremium sets your leverage level at ForexPremium's default margin level for the deposited amount. The requirements for leverage vary with account size.
- Accounts Under $100,000: minimum $1,000 in equity per open lot (1%)
- Accounts $100,000 - $500,000: minimum $2,000 equity per open lot (2%)
- Accounts Over $500,000: minimum $3,000 equity per open lot (3%)
Equity is the value of funds in the account adjusted for floating profit/loss on open positions. One lot has an approximate market value of $100,000. A requirement of $1,000 in equity per open lot is, therefore, approximately equal to a maximum leverage or gearing of 100:1.
Margin Watcher
ForexPremium guarantees limited risk . If the equity in the account drops below the margin required to maintain the open positions, some or all open positions will be liquidated. This protects the trader from losing more than the funds deposited into the trading account.
Rollover/Interest Policy
In the spot forex market, trades must be settled in two business days. If a trader sells 100,000 Euros on Tuesday, the trader must deliver 100,000 Euros on Thursday, unless the position is rolled over. As a service to our traders, ForexPremium automatically rolls over all open positions to the next settlement date at 5 p.m. ET. Rollover involves exchanging the position being held for a position expiring the following settlement date. The positions being exchanged are usually not valued at the same price. The amount of the difference varies greatly based on the currency pair, the interest rate differential between the two currencies, and fluctuates day to day with the movement of prices. For instance, on any given day, the rollover can be $2 per lot for USD/JPY and $15 per lot for GBP/JPY.
At 5 p.m. ET, funds are subtracted from or added to accounts with open positions because of the automatic rollover. For accounts that have a margin requirement of 2% or more, funds are added to the account for positions in which the client is long (holding) the currency bearing the higher interest rate. Funds are deducted in the opposite circumstance. For accounts that do not have a 2% margin requirement, the rollover amount is deducted from the account for each position, regardless of the account's holdings. This 2% margin requirement is the most generous policy available to traders in the forex industry, as many firms require 3-5% minimum margin before traders can benefit from rollover.
Note: On Wednesdays, the amount added or subtracted to an account as a result of rolling over a position tends to be around three times the usual amount. This "3-Day" rollover accounts for settlement of trades through the weekend period.
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Mini Account
Why Trade a Mini Account?
The ForexPremium Mini account is designed for those new to online currency trading and those with limited investment capital. There is a smaller deposit required to open a ForexPremium Mini account and trading sizes are 1/10th the size of a regular account. The smaller trade size greatly reduces the risk associated with currency trading. Although the ForexPremium Mini account provides as much or more leverage as a regular account, clients have the opportunity to take smaller size positions, taking on less total risk. The ForexPremium Mini is intended to introduce traders to the excitement of currency trading while minimizing risk.
More Staying Power in the Market
In our experience, traders with accounts under $5,000 are more successful trading with a Mini account. Trading currencies during times of heavy market volatility can be very risky if you are overexposed. Many traders have accounts that are too small to withstand even a small market movement against them, or to allow for the trader to make a mistake. Because of the reduced margin requirement associated with the Mini account, traders are less likely to experience early margin calls.
The approximate pip value on a regular ForexPremium account is $10 per pip. Therefore, if you were leveraging $1,000 to hold a $100,000 (one lot) Euro position (assuming a $2,000 account), the market would only have to move 100 points, 1 percent, to generate a margin call. This can happen in one day. On the Mini, however, the margin requirement is only $50 per lot. So a trader with $200 who opens a 1-lot Euro position can withstand a market swing of 150 pips - 50% greater than what the trader would have on the regular ForexPremium account.
Develop a Disciplined Trading Strategy without Focusing on P/L
The Mini account can be a useful asset in assisting traders to cultivate a disciplined trading strategy without focusing on P/L. When trading larger volumes on the standard account, traders with smaller account balances tend to watch their equity fluctuate and so base trading decisions on emotional reactions to these fluctuations. For example, such traders tend to resist closing-out trades at a loss, using the rationale that the market will turn around. Undercapitalized traders also tend to take their profits immediately when the market is moving in their direction, rather than maximizing their gains by letting their profits run.
For example, a 20-pip profit on a 100,000 Euro trade is $200. For a $5,000 account, this is equivalent to 4% of the account equity, compelling the average trader to take his profit, though the trade has a 100-pip profit potential. On the reverse side, no one wants to realize a $200 loss, so traders tend to hold a losing position until the loss is too much to bear. On the Mini account, this same example would translate to $20, which takes the emotion out of the P/L since $20 is insignificant to most traders. A Mini account allows traders to focus on the proper chart points and trade signals, and really learn currency trading without paying as much attention to their P/L. In the long run, this will hopefully lead to more profits and fewer losses. Until clients are completely comfortable trading currencies on a highly leveraged basis, trading smaller amounts on the ForexPremium Mini is highly recommended.
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