Trading with Leverage (Trading on Margin)
Leverage available - margin requirements
With Fab Investing, you are able to leverage your FX positions up to 50 times, or 2% margin required on the notional value of the position.
Forex is traded on margin, enabling you to leverage a small margin deposit for a much greater market effect.
You have deposited USD 20,000 on your trading account with Fab Investing.
You consider buying USDJPY 1,000,000, as you expect USD to increase in value against JPY. The Trade Ticket on your trading platform will display the margin required for making the trade as USD30,000 (3% * USD1,000,000)
Margin requirements may be changed without prior notice. Fab Investing reserves the right to increase margin requirements for large position sizes, including client portfolios considered to be of very high risk.
It is your responsibility to ensure that the required margin collateral, as listed in the Account Summary on the trading platforms, is maintained at all times.
If at any time while an FX position is open, and the margin required to maintain that position exceeds the funds available for margin trading on the account, you are in breach of your contract and need to meet the margin requirements again. This can be done by either:
- Reducing the size of the open margin positions and/or
- Providing more funds (margin collateral) to the trading account
When the required margin exceeds your margin collateral, you are at risk of a stop-out. In such a circumstance, Fab Investing is entitled to close ALL your margin positions on your behalf.
Trading risks are magnified by leverage – losses can exceed your deposits. Trade only after you have acknowledged and accepted the risks. You should carefully consider whether trading in leveraged products is appropriate for you based on your financial circumstances. Please consider our Risk Warning and General Business Terms before trading with us.
Supported Order types
All market standard order types are available, i.e. Market, Limit and Stops.
Trailing Stops, where the Stop level moves in line with the market price, are supported for all three Stop order types.
All Stop and Limit orders can be placed as:
- Day Order – automatically expires at the end of the giving business day (i.e. at 17:00 EST - New York Eastern Standard Time).
- Good till Cancelled (GTC) – order stays open until cancelled or when filled.
- Good till Date (GTD) – order automatically expires at the end of a selected business day.
Free 'No-Slip' Stop orders*
'No slip' Stop orders are available on major currency pairs for FREE, in amounts of up to 3 million of base currency and if placed a specific distance away from the current market price. Also see under ' Free 'No-Slip' Stop Orders' below.
* In normal market conditions.
A Market Order, for a currency pair and amount within the streaming liquidity, is treated in the same way as if you are requesting to trade FX spot directly from a Trading Module (i.e. 'Trade on Quote') with the exception that a Market order will never be rejected (but can therefore result in a slippage). Market Orders are always filled at the current available price for the given amount.
Limit orders are used to take profit or to enter the market at a certain price level:
- Limit orders to buy can only be placed below the current market price.
- Limit orders to sell can only be placed above the current market price.
- ‘Aggressive’ Limits – Fab Investing allows for the placement of ‘slightly’ in-the-money limits for clients to use as a limited Market order.
Limit orders are generally filled at the limit price. However, they may be filled at a better price during larger market gaps, for instance during the market opening period (Monday, 05:00 Sydney time) or during news events. Limit orders are never filled at a price worse than the original limit price.
Stop Orders are typically used to limit losses at a certain price level. Stop orders are typically filled at the stop level selected by the client, except for 'Buy Stop if Bid' and 'Sell Stop if Offered' where the fill is done on the opposite side of the spread from the stop level. These orders are typically filled at the stop level adjusted for the spread at the time.
Stop Orders are filled on transparent prices and the majority of orders are filled at the expected level set by the client.
Stop if Bid / Stop if Offered
Stop if Bid orders are typically used to limit losses on short positions. Stop if Offered orders are typically used to limit losses on long positions. This is to prevent orders from being triggered just because of a temporary large spread (maybe for a split of a second).
Fab Investing therefore encourages you to only use Stop if Bid for Buy orders and Stop if Offered for Sell orders.
In order to help you select the right Stop order type, the 'FX Order' Ticket on the platforms automatically defaults to Stop if Bid for Buy and Stop if Offered for Sell orders unless you actively change it before placing the order.
- Stop if Bid orders to buy are most often filled at the order level plus the client spread when triggered.
- Stop if Offered orders to sell are most often filled at the stop order level minus the client spread.
- Stop if Bid orders to sell are filled at the client Bid price when triggered.
- Stop if Offered orders to buy are filled at the client Offier price when triggered.
Fab Investing order management system has certain client protection mechanisms in place that ensures that the vast majority of orders are filled without any slippage in normal market conditions. However, during volatile markets with price gaps, orders may be slipped to the current market price.
Free 'No-Slip' Stop Orders*
'No Slip' Stop Orders (this order type is just called Stop in the trading platform) are offered for FREE on major currency pairs (listed below) in amounts of up to 3 million of notional base currency. This type of order has to be placed a 'Minimum Distance' away from the current market price.
'No Slip' Stop orders are close to always being filled at the desired stop level specified by you. Unless there is a very large price gap in the market (more than the defined 'Maximum Gap' shown below) the order will be filled at the specified order level - ZERO SLIPPAGE, at no cost.
'No Slip' Stop Orders will be automatically rejected if they are not at least the minimum distance away from the current market price.
* In normal market conditions.
Automatic Order fill
The vast majority of FX orders placed with Fab Investing are filled automatically without any manual intervention from the dealing desk.
For very large orders, during very volatile market conditions (for example during release of key economic figures) and in certain non-streaming currency pairs, manual review from the dealing desk is performed.
Manual Order fill
Typically, only a very small proportion of orders placed with Fab Investing require manual intervention. These orders are either too large in size for automatic execution for that particular currency pair, in an illiquid currency pair without streaming price or it is such that there are high volatile and/or illiquid market conditions.
During illiquid market conditions there are fewer market participants and thus dealers will need to check the price and also that the desired trade amount is actually available in the market. For some currency pairs, all orders might be filled manually. This is could be due to very low trading volumes / liquidity in a particular pair.