PingPong Intelligence

Margin

Margin and Leverage

Leverage refers to borrow money to invest with hoping a significant increase in returns. Foreign exchange trading usually offers high leverage. The money an investor used as pledge to borrow a larger amount from a brokerage firm is called Margin.

As required by the Securities and Futures Commission of Hong Kong,PingPong Intelligence offer clients with a maximum of 20:1 leverage ratio, which means the fund accessible is 20 times as much as the client’s initial investment.

Initial Margin Requirement

The amount must be deposited in cash by the client before a brokerage company will lend money to that client to open a position.

Maintenance Margin Requirement

The minimum amount an investor must maintain in the margin account. If the fund in the client’s account is not sufficient to meet the maintenance margin requirement, a margin call will be initiated.

Liquidation Margin Level

If the client’s fund level falls below the liquidation margin level, the system will automatically close out all the existing positions.

Margin Call

When a margin call is received, the client must fund the account immediately to reach the maintenance margin requirement or the current position will be liquidated.

Minimum Initial Margin Level 5% of Open position value
Minimum Maintenance Margin Level 3% of Open position value
Minimum Liquidation Margin Level 1% of Open position value

Comparison of trade with margin and no margin

Assume a client purchased one lot USD/CAD @ 1.3200, for a lot of USD/CAD equivalent to 100,000 USD, a minimum of 5,000 USD is required for the initial margin for the position.

	With Margin (20:1 leverage ratio)	No Margin
Initial Investment (USD)	$5,000	$5,000
Fund Accessible	$100,000	$5,000
Profit if rate moves up to 1.3500	$2,222.22	$111.11
Percentage gain	44.44%	2.22%
Profit if rate moves down to 1.2800	-$3,125	-$156.25
Percentage gain	-62.5%	-3.13%

*Note: Simplified case assuming no rollover rate

With margin, the client’s buying power is amplified by 1/(5%)=20 times.

Both the gain and loss are magnified with leverage. Thus, an investor must carefully manage the risk when trading with margin.

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PingPong Intelligence Limited (“PingPong Intelligence”) is a limited liability company incorporated under Hong Kong law. PingPong Intelligence ( CE Number: BOW876 ) is a company authorised and regulated by the Hong Kong Securities and Futures Commission and has its principal place of business at Unit 1207, 12/F., Emperor Group Centre, 288 Hennessy Road, Wan Chai, Hong Kong.

Please note that the information on this site and any products and services we offer are not targeted at investors residing in the United States and mainland China, and are not intended for distribution to, or use by any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation. Please click here to view our full disclaimer.

Trading foreign exchange, foreign exchange forwards, and other over-the-counter products carries a high level of risk and may not be suitable for all investors. You may sustain losses in excess of your initial margin funds. Leverage can work against you. Placing contingent orders, such as “stop-loss” or “stop-limit” orders, will not necessary limit losses to the intended amounts. Market conditions may make it impossible to execute such orders. You may be called upon at short notice to deposit additional margin funds. If the required funds are not provided within the prescribed time, your position may be liquidated. You will remain liable for any resulting deficit in your account. You should therefore carefully consider whether such trading is suitable in light of your own financial positions and investment objectives. Do not speculate with capital that you cannot afford to lose. If you decide to trade products offered by PingPong Intelligence,you must read and understand the information and disclosure provided by PingPong Intelligence.

PingPong Intelligence may provide general commentary which is not intended as investment advice and must not be construed as such. Seek advice from a separate financial advisor. PingPong Intelligence assumes no liability for errors, inaccuracies or omissions; does not warrant the accuracy completeness of information, text, graphics, links or other items contained within these materials. Read and understand the Terms and Conditions prior to take further action.

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