Trading Platforms Tackle COVID-19 Volatility by Reducing Leverage
- Crude oil prices hit a 17 year-low on Monday.
As the coronavirus gripped the global financial markets creating uncertainties, three major trading platforms - Admiral Markets, Dukascopy, and IG - on Friday changed Leverage Leverage In financial trading, leverage is a loan supplied by a broker, which facilitates a trader in being able to control a relatively large amount of money with a significantly lesser initial investment. Leverage therefore allows traders to make a much greater return on investment compared to trading without any leverage. Traders seek to make a profit from movements in financial markets, such as stocks and currencies.Trading without any leverage would greatly diminish the potential rewards, so traders In financial trading, leverage is a loan supplied by a broker, which facilitates a trader in being able to control a relatively large amount of money with a significantly lesser initial investment. Leverage therefore allows traders to make a much greater return on investment compared to trading without any leverage. Traders seek to make a profit from movements in financial markets, such as stocks and currencies.Trading without any leverage would greatly diminish the potential rewards, so traders Read this Term for margin trading.
Admiral Markets will reduce the maximum possible leverage available to professional clients on four crude oil-related contract-for-difference (CFD) instruments.
“For notional position values up to 500,000 EUR (or USD, or CHF or equivalent in another currency) the maximum possible leverage will be 1:50,” the firm's announcement noted. “For notional position values in excess of the above mentioned 500,000 EUR, the leverage will be 1:10.”
The new margin requirements will be applicable from April 4 and remain the same until “further notice” from the platform.
These new requirements will apply to all open and new positions in the four selected instruments.
Dukascopy, on the other hand, has reduced leverage for commodities, indexes, and precious metals to 1:30; however, no change was brought to other trading instruments.
IG also increased the range of minimum margin rates on new positions for the weekend on indices, FX/gold, and oil.
The minimum margin for indices will be raised to 5 percent, FX/gold to 3 percent, and oil (energies) to 15 percent.
“We will revert to lower margins rates on Sunday with minimum rates of 1% Indices/FX and 5% Oil. Once again these changes will be dependent on market conditions over the weekend,” IG noted.
Unpredictable markets
These changes came as the global markets are going through tremendous Volatility Volatility In finance, volatility refers to the amount of change in the rate of a financial instrument, such as commodities, currencies, stocks, over a given time period. Essentially, volatility describes the nature of an instrument’s fluctuation; a highly volatile security equates to large fluctuations in price, and a low volatile security equates to timid fluctuations in price. Volatility is an important statistical indicator used by financial traders to assist them in developing trading systems. Traders In finance, volatility refers to the amount of change in the rate of a financial instrument, such as commodities, currencies, stocks, over a given time period. Essentially, volatility describes the nature of an instrument’s fluctuation; a highly volatile security equates to large fluctuations in price, and a low volatile security equates to timid fluctuations in price. Volatility is an important statistical indicator used by financial traders to assist them in developing trading systems. Traders Read this Term with the COVID-19 outbreak along with the geopolitical war on oil prices.
As Admiral Markets reduced the leverage for crude markets, it also pointed out that WTI crude oil hit a 17-year low at $19.02 a barrel. The market is still uncertain as Russia and Saudi Arabia are debating cutting global oil supply by 10 million barrels a day to prevent further price falls amid the coronavirus pandemic.
Meanwhile, the IG Group recently launched a new prime brokerage unit under the brand ‘IG Prime,’ Finance Magnates reported.
As the coronavirus gripped the global financial markets creating uncertainties, three major trading platforms - Admiral Markets, Dukascopy, and IG - on Friday changed Leverage Leverage In financial trading, leverage is a loan supplied by a broker, which facilitates a trader in being able to control a relatively large amount of money with a significantly lesser initial investment. Leverage therefore allows traders to make a much greater return on investment compared to trading without any leverage. Traders seek to make a profit from movements in financial markets, such as stocks and currencies.Trading without any leverage would greatly diminish the potential rewards, so traders In financial trading, leverage is a loan supplied by a broker, which facilitates a trader in being able to control a relatively large amount of money with a significantly lesser initial investment. Leverage therefore allows traders to make a much greater return on investment compared to trading without any leverage. Traders seek to make a profit from movements in financial markets, such as stocks and currencies.Trading without any leverage would greatly diminish the potential rewards, so traders Read this Term for margin trading.
Admiral Markets will reduce the maximum possible leverage available to professional clients on four crude oil-related contract-for-difference (CFD) instruments.
“For notional position values up to 500,000 EUR (or USD, or CHF or equivalent in another currency) the maximum possible leverage will be 1:50,” the firm's announcement noted. “For notional position values in excess of the above mentioned 500,000 EUR, the leverage will be 1:10.”
The new margin requirements will be applicable from April 4 and remain the same until “further notice” from the platform.
These new requirements will apply to all open and new positions in the four selected instruments.
Dukascopy, on the other hand, has reduced leverage for commodities, indexes, and precious metals to 1:30; however, no change was brought to other trading instruments.
IG also increased the range of minimum margin rates on new positions for the weekend on indices, FX/gold, and oil.
The minimum margin for indices will be raised to 5 percent, FX/gold to 3 percent, and oil (energies) to 15 percent.
“We will revert to lower margins rates on Sunday with minimum rates of 1% Indices/FX and 5% Oil. Once again these changes will be dependent on market conditions over the weekend,” IG noted.
Unpredictable markets
These changes came as the global markets are going through tremendous Volatility Volatility In finance, volatility refers to the amount of change in the rate of a financial instrument, such as commodities, currencies, stocks, over a given time period. Essentially, volatility describes the nature of an instrument’s fluctuation; a highly volatile security equates to large fluctuations in price, and a low volatile security equates to timid fluctuations in price. Volatility is an important statistical indicator used by financial traders to assist them in developing trading systems. Traders In finance, volatility refers to the amount of change in the rate of a financial instrument, such as commodities, currencies, stocks, over a given time period. Essentially, volatility describes the nature of an instrument’s fluctuation; a highly volatile security equates to large fluctuations in price, and a low volatile security equates to timid fluctuations in price. Volatility is an important statistical indicator used by financial traders to assist them in developing trading systems. Traders Read this Term with the COVID-19 outbreak along with the geopolitical war on oil prices.
As Admiral Markets reduced the leverage for crude markets, it also pointed out that WTI crude oil hit a 17-year low at $19.02 a barrel. The market is still uncertain as Russia and Saudi Arabia are debating cutting global oil supply by 10 million barrels a day to prevent further price falls amid the coronavirus pandemic.
Meanwhile, the IG Group recently launched a new prime brokerage unit under the brand ‘IG Prime,’ Finance Magnates reported.