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Interview with David Muscat, Head of Affiliates and Marketing at EagleFX

TABLE OF CONTENTS:

Interview with Head of Affiliates and Marketing at EagleFX David Muscat (linkedin profile)

 

What exactly is leverage and why is it important to EagleFX clients?

I personally think of leverage as a loan of sorts. It allows us to invest larger amounts of money in our trades, even when starting out with relatively small deposit amounts. In my opinion using leverage, will help stretch your trading dollars without increasing your deposit amounts

 

Can you give an example of leverage in action?

Absolutely! Let me try to simplify it, let’s say you have $1,000 in your trading account and borrow $100 for on every dollar from us, you would then have exactly $100,000 to trade with. Now let’s assume that you’re trading with the EUR/USD pair and the rate moves by 100 pips and you want to enter the market, you would then have $100,000 to open a trade, rather than only $1,000. So, in reality the use of leverage will allow you to trade much larger lot sizes and increase your total exposure to the markets

 

 

What is the maximum leverage setting that one may select when trading with EagleFX and why?

At EagleFX, we’ve opted to extend leverage of up to 1:500 to our clients. The reason why is very simple, actually. Traditionally, part of the appeal of Forex trading is the ability to trade with leverage. Clients want it and we’re in the business of giving clients what they want and need to be successful and profitable

 

Will you be decreasing your maximum leverage ratio in the future?

Clients have the option to decrease and control their leverage below 1:500 if they wish. This can be done from the clients account or with the assistance of a customer service agent.

 

Does leverage apply to all asset types?

Yes, the maximum leverage varies on the different assets, 1:500 Forex & Metals, 1:200 on Indices & Energies, 1:100 on Cryptos and 1:20 on Stocks

 

What are the benefits of trading with leverage?

Leverage minimizes the amount of capital that is needed to trade within the FX markets. Rather than paying out the total asset price, you can apply leverage and then only need to pay a small portion of it. Another benefit about leverage also provides you with the opportunity to trade on a wider variety of traditionally expensive instruments with high liquidity, even if you only have a small amount of money to start with. It increases your overall exposure to the markets, allowing you to enter into much larger trades than you might have been able to enter using only your own capital

 

Are there any benefits to trading with high leverage?

Definitely, with a higher leverage means a higher “loan” amount, so yes, there are benefits. The higher the leverage, the higher the exposure to the markets. Leverage of 1:500 means that your chosen trade amount can be multiplied 500 times over. When you think about it, it’s all pretty amazing

 

Are there any credit checks or collateral required when trading with leverage?

No, nothing like that. The only thing you would only need to do is to create an account with us, make a deposit, and then start trading with your desired amount of leverage. We talk a lot about the 1:500 ratio, but, traders can select lower leverage amounts as well. The setting starts as low as 1:1 and climbs higher from there

 

What about potential drawbacks? Are there any and if so, what are they?

It’s very important to remember that leverage has the power to magnify both your profit and your loss potential. We do advise that each client puts plenty of thought into what ratio they want to select. When deciding how much leverage to use, regardless of the assets you decide to trade on, you must assess your risk tolerance. Only then will you truly know what leverage ratio you’ll be comfortable using

 

If I’m new to trading, how would I go about seeing leverage in action risk-free?

I have this theory, practice makes perfect, so a demo account is far and away the best option for seeing leverage in action without taking on any financial risk. With a demo account, you can trade using mock funds. It costs nothing and our demo accounts are unlimited. We’ll even allow you to have more than one demo account if needed

 

If I do decide to make a deposit, what is the minimum acceptable amount?

We accept deposits as low as $10 and do not charge any deposit fees. Of course, the more you have in your account, the greater the amount of leverage that you’ll be able to access. It’s also worth noting here that we also do not charge any withdrawal fees

So, are you saying that one would need to deposit a larger amount in order to access higher leverage?

Ha, ha! I knew I would get that question. But, no, allow me to clarify. Since leverage is a percentage based upon the account balance, it naturally increases when the account balance does. You’ll still have access to the same leverage ratio on an account with a $10 balance as an account with a $10,000 balance. I hope this clears that up

 

Would trading even be possible with a small deposit?

No doubt, there are some challenges that come with starting out with a smaller amount, but we help traders to work around those by allowing them to trade in micro lots rather than whole lots. Our clients are free to enter positions as small as 0.01 micro lot. As such, starting costs can be reduced while profits are grown. This fact can also aid in executing strict money management plans

 

How do I see my current leverage setting withing the EagleFX trading platform?

Leverage trading on our MT4 platform is quite easy. To set your leverage, simply go to the ‘Navigator’ window and then click on the ‘Accounts’ link. Next, you’ll want to hover your mouse over your account number. Once this is done you should see your base account currency and current leverage ratio

 

How do I change my leverage setting?

You’ll be able to easily change your leverage setting within your EagleFX back office account. You’ll see the option to make this change within the accounts area. Do note that the system will not allow you to make changes to your leverage setting if you have any open positions, so you’ll want to initiate the change only after closing open trades

 

Can I trade with no leverage whatsoever? If so, how?

Yes, you definitely can decide to trade without leverage if you wish. There is no requirement to use leverage at any time. To trade without leverage, simply log into your EagleFX account and change your leverage setting to 1:1. Once this is done, you’ll only be able to trade using the exact amount of funds that are in your account.

 

What should I do if I need help with changing my leverage setting?

We take great pride in the customer service experience that we provide, so do not hesitate to contact us if you need help. We actually offer 24/7 live support via phone and live chat. You can also email us anytime. All of our agents are cross-trained, so anyone that you speak with will be empowered to assist you with not only questions related to leverage, but any type of account or trading related questions

 

Does the maximum leverage change by asset?

Yes, it certainly can. One example of an asset group that is typically associated with lower leverage is cryptocurrencies. The volatility seen with cryptocurrencies is amazing and these assets can be further leveraged through platforms such as ours

 

What role does margin play in leverage usage?

The leverage ratio actually signifies the minimum margin when trading FX. If the leverage ratio is 50:1, this signifies that the lowest margin requirement would be 2%. Similarly, the margin requirement for a ratio of 100:1 would be calculated as 1% and so on.

 

Can you provide an example of margin calculation?

Yes, definitely. Let me put my math to practice. It’s important to understand the link between the leverage ratio and margin requirements clearly. We’ve already covered the fact that the leverage ratio equates to the minimum margin requirement. So, let’s assume that the leverage ratio is 100:1. This would mean that the minimum margin requirement is 1/100, or 1%. What this means is that the trader would need to have at least 1% of the total trade amount in his or her trading account as cash

 

We often hear the term “margin call” being used in Forex. What is that exactly?

A margin call is what occurs when a trader no longer has any free margin remaining in their account. At that point, open positions are liquidated in order to bring the account back to an acceptable level. This tends to occur whenever trading losses reduce the usable margin amount, bring it below a set level

 

What is EagleFX’s margin call level then?

We have our system set to execute a margin call at 100%

 

Are there any benefits for the trader to have margin call set at 100?

Yes, most certainly. Being stopped out at 100% of margin will save you significantly more money in cases where losses are inevitable. Furthermore, a 100% margin requirement does the last step of money management job for you, working to prevent you from losing your last short if you don’t yet possess the money management skills required to avoid potential problems entirely

 

Okay, so we understand what a margin call is now, but what is its true purpose?

Honestly, the purpose is really two-fold. On one hand, the purpose is to help the trader to regain control, since a margin call would mean that he or she no longer has the required amount of money in their account to hold onto losing positions. Secondly, at this point, we as the broker are now on the line for these losses and of course, look to limit the total loss amount

 

Do you have any tips for avoiding margin calls?

If I tell you, I would be giving out my trading secrets, haha. There are most definitely ways in which to avoid margin calls. One tip would be to always have a risk management plan in place while trading Forex. Another would be to maintain a healthy free margin on your account. Lastly, and this is the most important tip – use stop losses to limit your loss amounts

 

Is there an easy way to calculate free margin?

Free Margin is the difference between the equity amount and used margin amount. If you do not have any open positions, then the equity amount would be the same as your account balance. With no open trades, there is no margin being used

 

What if I do have open trades though? How would that be calculated?

The easiest way to do this would be using an online margin calculator. These are widely available and free to use. However, there are ways to do the calculation on your own. This will require you to first calculate the required margin for the trade you wish to enter and then calculate the used margin. You should then be able to calculate the equity amount and then use that amount to get the free margin. Another way of looking at equity is that it is the sum of both your used and free margin.

 

What is a stop loss and how does it relate to leverage?

Let me try and simplify it, the stop loss level is a set level at which a trader has chosen to accept a losing trade. Once the stop loss level is hit, the position will be closed. There are a variety of stop loss styles and strategies that one can use to help protect their account funds.

 

Why does a broker have a stop loss level and what is EagleFX’s stop out percentage?

Once your account equity reaches 100%, it will be considered as insufficient to continue trading and maintaining currently open trades. At this point, what you can either do is either allow some or all positions to be closed or deposit additional funds into your account. If the market continues to move against you and no funds are added to the account, you may reach our stop out rate of 70%. At this point, the trading platform would automatically perform an automated closure of unprofitable positions starting with the least profitable and until the minimum margin requirement is met

 

We noticed that you are an STP broker. What does that mean and does it impact leverage in any manner?

STP means that we use straight-through processing to provide our clients with direct access to the markets. To put it simply, we are able to execute trades extremely quickly, locking in desired rates and limiting slippage. This doesn’t impact leverage directly, but in some way does in that you’ll want to enter the market at the desired rate in order to make the most of the leverage extended to you

 

We also noticed that EagleFX advertises “deep” liquidity. Does that impact leverage?

The answer here is like that of the previous question. When a trader has access to solid liquidity, they have access to great market rates and trading conditions. These, in turn, help you to get the most out of leverage usage

 

Just so readers are clear, which trading platform do you offer?

We’ve decided to offer the MetaTrader 4 platform. It can be downloaded for Windows and Mac systems, is available in application format for iOS and Android, and can be booted up directly within any of the major internet browsers using WebTrader

 

Why MT4 when MT5 is currently available?

Good question, I can start by saying we listen to our traders and most still want to use MT4. It’s what they know, what they are familiar with, what works best for them. The shift over to MT5 has been much slower than many anticipated, but we will, of course, continue to revisit to the topic and remain open to adding it in the future. We’re constantly reevaluating the wants and needs of our clients to ensure that they are completely satisfied with our services

 

Any final words for current and prospective clients wanting to use leverage within the EagleFX platform?

At EagleFX weactually love seeing our clients take a small deposit and through the use of leverage, grow their profits quickly and substantially. We’ve actually seen traders take a $10 deposit and turn it into thousands in a matter of only a couple of weeks. There truly is nothing quite like the power of leverage, especially since you do not see it used in other forms of trading. We like to invite you to be at the center of one of the next success stories that we hear and look forward to working with you

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