What are OANDA’s margin rules?

  1. The information in this topic applies only to v20 and v20 MT4 sub-accounts on OANDA web, desktop and mobile platforms.

  2. Note that the MT4 or TradingView User Interfaces (UIs) operate primarily as a front-end system intended for user convenience to facilitate order placement and chart viewing. OANDA endeavors to mirror the v20 MT4 account in the MT4 platform and the v20 account in the TradingView platform to the best extent possible, but it is critical to note that the definitive system of record and the ultimate source for OrderClosedAn instruction to buy or sell an instrument under the specified conditions Monitoring and Execution, Marked to Market Open Positions, MarginClosedThe required collateral or good faith deposit to open and maintain a leveraged position. Utilization, and Margin Close Out processes is the proprietary OANDA UIs; it is not the MT4 or TradingView platform.

OANDA supports leverage trading which means you can enter into positions larger than what your account balance would otherwise permit. The following leverage and margin-related concepts will help you understand the advantages and manage the risks.

The size of the positions you can open depends on the margin (deposit from your own capital) and the applicable leverage (use of borrowed capital) for a given instrument.

LeverageClosedThe use of borrowed capital to open positions larger than what the actual capital permits. and margin are mathematically related.

Leverage = 1 / Margin Requirement.

For example, if the margin requirement is 2% (0.02), the leverage would be 1/0.02 = 50/1

50:1 leverage means that for every $1 of your own funds, you can hold a position worth $50 in the market.

Refer to our website for the current margin rates for each instrument.

The account summary information on OANDA platforms provide NAV (Net Asset Value) and Unrealized P/LClosedThe profit or loss calculated on your open positions based on the current bid or ask prices, but it remains unrealized until the positions are closed. (UPL) of your sub-account. In simple terms, NAV is the estimated value of your sub-account including unrealized profit or loss.

Mathematically, NAV = Account balance + Unrealized P/L (UPL) where UPL is estimated using the sided prices (bid or ask price) for each position.

If you were to close all your open positions, your actual UPL and NAV may differ from the estimate provided in the account summary because:

  1. The UPL for the aggregated open position is calculated based on the sided price for the total aggregated notional amount of that position. There is an embedded assumption that the total position would be closed/liquidated in its entirety as one exit trade. In reality you may close your positions in parts and at different Depth of Market (DOM) levels.

  2. The estimate includes Quote to Home currency conversion rates (including any markup), which may change and are finally determined at the point of position closure.

That said, NAV and UPL provide a reasonably good estimate of your sub-account value. It can help you with decisions such as:

  1. Adjusting the stop loss on your positions

  2. Closing certain positions

  3. Adding to your margin

TradingView platform uses the same terms and calculations.

MetaTrader platform shows Equity instead of NAV but it is calculated in the same way. MetaTrader platform calculates UPL at the Top of Book sided price only unlike OANDA platforms that calculate as per the appropriate DOM size.

NAV_midClosedNAV calculated at the current mid prices only for margin calculations. and UPL_midClosedUnrealized P/L calculated using the current mid prices for margin calculations are not shown in your account summary. They are used only for margin calculations.

Conceptually NAV_mid and UPL_mid are the same as NAV and UPL respectively except that NAV_mid and UPL_mid use mid prices instead of sided prices (bid or ask price).  NAV_mid and UPL_mid are used for margin calculations because they do not change if only the bid/ask spread changes.

TradingView and MetaTrader platforms do not use or show NAV_mid and UPL_mid at all.

The account summary on our platforms provides the values for Margin Used and Margin Available.

While Margin Used represents how much of the NAV_mid is currently held as margin against your open positions, Margin Available represents how much of your NAV_mid is available to open new positions.

These values are dynamic as they change with the change in the Instrument to Home currency conversion rate used in the calculations.

Mathematically, Margin_Available = NAV_mid - Margin Used

where,

Margin Used = Margin_Rate * TradeClosedA trade is the actual execution of buying or selling an asset, resulting in a completed transaction._Quantity * Instrument_To_Home_Ccy Conversion current mid-rate

TradingView shows

  • Margin Used and Margin Available in the Account summary section  in line with OANDA UIs.

  • Margin Used in the Order Ticket (to be interpreted as the amount required to open a new Market Order), displays only the approximate value using a sided conversion rate instead of mid-rate.

MetaTrader platform calculates Margin Used using the sided prices (bid/ask). It is a static value calculated when an order is executed and remains constant.

These differences are outside of OANDA’s control. Always refer to OANDA platforms for margin calculations.

Also note that MetaTrader platform uses Free Margin instead of Margin Available, although it is calculated in the same way.

The displayed percentage in the account summary is to be interpreted as a Margin Close-Out Percentage.

Mathematically, Margin_% = (50% * Margin_Used) / NAV_mid where,  mid-prices are used to calculate UPL_mid in NAV_mid

Values range from 0% (no money reserved as margin) up to 100% (the trigger point for a Margin Close-Out event).

TradingView does not display margin close-out percentages.

In MetaTrader, the displayed percentage is to be interpreted as a ‘Margin Coverage Percentage’.

Mathematically, Margin_Level_% = Equity / Margin_Used

Values range from infinity (no money reserved as margin) down to 50%, where 50% is approximately equal to a Margin Close-Out Percentage of 100% in v20.

A Margin Call is triggered when the NAV_mid falls below Margin Used. In other words, when Margin Close-Out Percentage >= 50%, you’ll receive a margin call. When you receive a margin call alert, you are required to deposit additional funds or close open positions to return your NAV_mid to a value greater than your Margin Used.

Margin callClosedAn alert when the estimated value of your account is less than your used margin and you are required to deposit additional funds or close open positions. is never based on third-party platform calculations.

There is no such indicator in the TradingView platform.

In the MetaTrader platform, when Margin Coverage Percentage <= 100%, you may be close to OANDA’s margin call.

If NAV_mid (value of your account at mid prices) falls to less than half of your Margin Used i.e. Margin Close-Out Percentage >= 100%, all open positions will be automatically closed using the current rates at the time of closing. If trading is unavailable for certain open positions at the time of the margin closeout, those positions will remain open and we will continue to monitor your margin requirements. When the markets reopen, another margin closeout may occur for the remaining positions if your account remains under-margined.

In a fast moving market, there may be little time between margin call alerts, or there may not be sufficient time to warn you at all. Be mindful of the Margin Close-out % in the account summary of the OANDA platform UIs. The closer the Margin Close-out Percent is to 100%, the closer you are to a margin closeout.

Margin Close-Out events are never based on third-party platform calculations.

There is no such indicator in the TradingView platform.

In the MetaTrader platform, when Margin Coverage Percentage <= 50%, you may be close to OANDA’s Margin Close-Out event.

Refer to margin calculations for a v20 account on OANDA platform.

Take proactive measures to avoid getting a margin close-out on your account. For example,

  • Monitor the status of your account continuously

  • 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. Stop loss and take Profit orders are not guaranteed; gaps in market pricing may cause your stop loss orders to be filled at a less advantageous price, or your take profit orders to be filled at a more advantageous price than the level you specify.

    Your trade is closed at the current OANDA rate, which may vary from your stop loss price -- especially when trading resumes after periods of market closure.

  • If you happen to be close to a margin closeout, the unique features of the OANDA platform provide some simple strategies to avoid it:

    • Incrementally reduce the size of your positions as you get close to a margin closeout. (OANDA allows you to trade in arbitrary units, as opposed to fixed lots, which makes this simple to do.) For example, if you get a margin warning, reduce the size of all your open positions by 10%. This effectively lowers the amount of margin required, giving you more breathing room.

    • Close individual positions to reduce the amount of margin required.

    • Transfer additional funds into the account from another sub-account.

    • Add funds to the account. Note, however, that the time it takes to add funds could mean your funds arrive too late.

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