Margin trading in Esperio: reviews of broker clients

Most forex brokers now work with CFD contracts. They are derivative financial instruments that allow people to earn on changes in the asset price to which such a contract is linked.

Esperio Broker is no exception, and the company also uses CFD contracts. They have many advantages, including the ability to trade on margin. Let's look at the essence and features of such trading. 

What is margin trading in Forex? 

Margin trading is a way of working in the financial market where the trader can conclude transactions for an amount more significant than they have on the deposit. It can be done with the help of leverage, the size of which can be from 1:2 or 1:5 and up to 1:1000. This leverage is actually borrowed funds that the broker lends to the trader against the security of their assets. 

Such a pledge is often called a «margin», which led to the term «margin trading». Typically, the margin is expressed as a percentage and determines the leverage a trader can use. For example, if the margin requirement is 20%, then it means that the trader must have 1/5 of the value of the financial instrument with which they want to open a trade in their account. The amount of margin or leverage depends on various factors – the type of a particular financial instrument, the kind of market, the broker's policy, etc. 

Margin trading allows brokers to increase the size of their trades and earn more. But at the same time, such trading carries more risks since losses can quickly accumulate and eventually exceed the initial capital. Therefore, a trader needs to carefully analyze the market situation, use a more advanced risk management system, and constantly monitor the dynamics of the traded instrument when making a transaction using leverage. 

Features of margin trading in Esperio Broker 

Margin trading is one of the most requested services at Esperio. Esperio Forex reviews of the company's clients indicate that more than 70% of traders practice this type of trading to one degree or another. The maximum leverage in the company is 1:1000. However, for some trading instruments, margin requirements may vary depending on the volume of transactions. 

Esperio Broker's policy provides that leverage may remain the same with increasing trading volumes. But the calculation of margin requirements is carried out separately for each group of trading instruments and depends on the total margin set for the client's account. For example, there are rules for the forex market that can be seen in the screenshot below. 

Esperio margin trading recommendations 

The company's clients using leverage are advised to follow several essential rules since trading on margin carries increased risks. Many Esperio broker traders do not recommend trading with leverage higher than 1:50 or a maximum of 1:100 in their reviews. In addition, it is crucial to remember to use such a tool as a stop loss. Observing a profit-to-risk ratio of 1:3, preferably 1:5 when opening trades, is always desirable. 

You must remember that the maximum amount for which you open an order should be at most 10% of the total deposit. If using increased leverage (more than 1:20), this amount should be reduced to 5% or 3%. Remember that in trading, a fundamental principle says that lost profits are always better than losses incurred.