What are OANDA margin rules? OANDA Corporation

Margin: a good faith deposit or performance bond. In leveraged trading, the margin amount is held in deposit while the trade is open. The amount of margin required to enter a trade is determined by the rules discussed below. Although there is no minimum margin deposit required to open an OANDA platform account with OANDA, the margin available in your account will limit the size of the positions you can open.

Leverage: the reciprocal of margin. For example, 2% margin is the same as 50:1 leverage. The maximum leverage allowed is determined by the regulators in each geographic region.

Net asset value: the net asset value (NAV) represents the current value of your account. The NAV is equal to your balance plus your unrealized P/L from all open positions calculated using the current bid or ask rates.

Regulatory margin requirement: the minimum margin required by the regulator for the instrument. The OANDA margin requirements page lists the Regulatory Margin Requirements for each instrument.

Margin used: the margin used represents how much of your net asset value is currently held as margin against your open positions. The margin used is equal to the position size multiplied by the margin requirement, summed up over all open positions. This amount is then converted into the currency of the account using the current midpoint rate. See the margin used calculation example below for an example on how to calculate your margin used.

Margin available: the margin available value is the greater of 0 and your net asset value minus your margin used.

Margin closeout value: the margin closeout value is equal to your balance plus your unrealized P/L from all open positions, converted into the currency of the account, all calculated using the current midpoint rates. See the margin closeout value calculation example below for an example of how to calculate your account equity.

Initial margin: the initial margin for a trade is equal to the trade size multiplied by the margin requirement. This amount is then converted into the currency of the account. When opening a new trade, your initial margin must be less than or equal to your margin available. If your initial margin is greater than your margin available, you cannot open the trade.

Margin closeout: if your margin closeout value falls to less than half of your margin used, all open positions will be automatically closed using the current OANDA 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 theOANDA platform will continue to monitor your margin requirements. When the markets reopen for the remaining open positions, another margin closeout may occur if your account remains under-margined.

Note about margin closeouts: in a fast moving market, there may be little time between warnings, or there may not be sufficient time to warn you at all. Be mindful of the “Margin Closeout Percent” field in the account summary of the OANDA platform user interface. The closer the margin closeout percent is to 100%, the closer you are to a margin closeout.

Regulatory margin used: the regulatory margin used is equal to the position size multiplied by the regulatory margin requirement specified by the regulator, summed up over all open positions. This amount is then converted into the currency of the account.

Margin call: at 3:45 PM ET daily, you will receive a margin call alert by email if your margin closeout value is less than your regulatory margin used. When you receive a margin call alert by email, you are required to deposit additional funds or close open positions to return your margin closeout value to greater than your regulatory margin used.

OANDA will send daily margin call emails to accounts that fall below margin requirements at 3:45 PM ET. When an account remains under-margined for two consecutive trading days, all open positions will be automatically closed using the current OANDA rates at the time of closing. If trading is unavailable for certain open positions at this time, they will be automatically closed using the current OANDA rates when the markets for those instruments re-open.

Margin requirement is checked at 3:45pm ET. Even if the account satisfies the margin requirement during the day but falls below for the 3:45pm ET check, the account will be considered undermargined.

Also note, if your account remains undermargined, starting on Monday before 3:45 p.m., an automatic margin closeout will occur on Wednesday at 3:45 p.m. unless a margin closeout occurs earlier due to the margin closeout value declining to half, or less than half, of the margin used. Saturday and Sunday do not count towards the two consecutive days as trading is not available on weekends (see OANDA's hours of operation ). If the account recovers before the end of two consecutive trading days by meeting the margin requirements at the 3:45 PM ET daily margin check, a new count will start again from the day the account falls below margin requirements again. For example, if your account is undermargined on Monday at 3:45 p.m., recovers and is adequately margined on Tuesday at 3:45 p.m., and then falls below margin requirements again on Wednesday before 3:45 p.m. and continuously remains undermargined, a margin closeout will occur two days later on Friday starting at 3:45 p.m.

You have a USD account and a long 10,000 EUR/GBP open position. The current rate for EUR/USD is 1.1320/1.1321, therefore the current midpoint rate of EUR/USD is 1.13205. The regulator allows 50:1 leverage (or 2% margin) on EUR/GBP.

Your margin used is position size x margin requirement = 10,000 EUR x 2% = 200 EUR. The margin used in your account currency = 200 x 1.13205 = 226.41 USD.

You have a USD account with a balance of 1,000 USD and a long 10,000 EUR/USD open position opened at a rate of 1.1200. The current rate of EUR/USD is 1.13200/1.13210, therefore the current midpoint rate of EUR/USD is 1.13205.

Your unrealized P/L calculated by the current midpoint rate is (current midpoint rate – open rate) x position size = (1.13205 – 1.1200) x 10,000 = 120.50 USD.

Your margin closeout value is 1,000 + 120.50 = 1,120.50 USD.

Governed by the National Futures Association (NFA), OANDA Corporation establishes margin rates and maximum leverage at their discretion.

See the OANDA Corporation margin rates list .

Take proactive measures to avoid getting a margin closeout 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. (Click on an open trade in the 'Trades' table, then click 'Modify' in the pop-up window to change the stop-loss.). 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.

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.