Trading mechanics
Leverage
The ratio between the notional size of a position and the margin required to hold it. At 1:50, $2,000 of margin supports a $100,000 position - it changes what you can open, not what you may lose.
GFN’s figure
GFN offers up to 1:50 on every programme - Instant, the 1 Step and the 2 Step. It can vary by instrument: forex, metals, indices, commodities and crypto carry different requirements.
- Leverage
- Up to 1:50 on all three programmes
- By instrument
- Varies - forex, metals, indices, commodities and crypto differ
- Effect on the rules
- None - the drawdown limits apply regardless
In detail
Leverage,explained
Leverage is frequently blamed for losses it did not cause. What determines risk is position size against stop distance; leverage only sets the ceiling on how large a position the account can carry at all.
On a prop account the risk limits bind long before the leverage ceiling does. High leverage with a tight daily loss limit simply means the limit is reached faster if the position is sized to the ceiling.
Related
Terms thatcome with it
Most rules only make sense next to the ones they interact with. These are the entries this one depends on.
Margin
The portion of account equity set aside to hold an open position. It is a deposit against the position rather than a cost, and it is returned to free margin when the position closes.
Free margin
Equity minus the margin currently committed to open positions. It is what remains available to open new trades or to absorb floating losses on the ones already running.
Position size
How many lots a trade is placed in. It is calculated from the dollar amount being risked and the stop distance, not chosen first - which is the reverse of how most traders approach it.
Lot
The unit position size is measured in. One standard forex lot is 100,000 units of the base currency; mini and micro lots are one tenth and one hundredth of that.
Margin call
A warning issued when equity falls to a set percentage of the margin required for open positions. It signals that the account is close to being unable to support the trades it holds.
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