Forex brokers & platforms without margin – Is that possible?
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Trading forex at times is hard because it needs a high capital to make a consistent income. Some strategies like day trading and scalping require the forex trader to maintain some deposit constantly.
Active traders also need a way to increase the funding on their trading accounts. Forex brokers offer leverage that helps traders commit a small percentage of their total equity in the margin account.
It has helped traders maintain a constant minimum requirement, only adding funds after some time. It is one of the reasons many traders prefer margin trading. Furthermore, it allows them to open a big position when risking a small portion of the total funds on their accounts.
Despite having all the positive traits, margin trading also requires a trader to be alert. It can deplete all the funds in a trading account in a short time.
What is margin trading?
Margin trading is when traders borrow a loan from their forex brokers to open a trading position. If a trader uses margin trading, the forex broker expects them to deposit some funds to access the total amount they need for trading.
The amount a forex trader borrows is leverage, while the deposit is the margin. If a forex trader applies for forex leverage, the forex broker opens a margin account where the trader deposits the margin.
The amount you need to maintain on your margin account is the maintenance margin. If your open trading positions and the market moves against you, the balance will reduce past the maintenance margin leading to a margin call.
The margin call is a notification for a trader to deposit more funds to their margin account. Failure to which the broker will close some open positions to mitigate the loss.
Forex brokers offer margin as a percentage or ratio of the total amount you want to borrow. For example, most forex brokers offer up to 50% of the total price of the investments.
Such that, if you deposit $3000 on your margin account, you can access $6000 worth of assets by borrowing $3000 from your broker.
It is crucial to know that your $3000 deposit will act as collateral for the borrowed funds. Forex traders can also borrow less than 50% and reduce the risk in the process. Forex brokers can also charge interest on this type of loan, which is the difference between leverage and margin trading.
Can you trade forex without a margin?
Yes, it is possible to trade forex without margin. Forex trading without margin would require a forex trader to have a high amount of capital. Forex trading has no guaranteed gains, and the chances of losses are often high for inexperienced forex traders.
More losses mean you have to top up your account more often than those using margin. Forex traders who trade without a margin are professional traders who use more than $10,000 capital when trading.
It does not rule out other traders, as any trader can opt-out of using margin trading.
When do you trade forex without a margin?
You can trade forex without margin under two conditions;
- If you have a capital of not less than $10,000, you can open positions comfortably and cover all the trading costs in the process. More trading capital means you have more strategies to use.
Most investors that trade without a margin are large corporations that deal with millions of shillings as capital. The forex broker is unable to raise more leverage than what they have. They also act as liquidity providers due to their large shares in a financial market.
- Forex traders can also trade without leverage if they trade financial markets such as cryptocurrency, indices, stocks, precious metals, and oils on CFDs. The cost of the smallest position sizes is lesser than that of foreign currency.
Is there a forex broker without margin?
No, forex brokers offer margin trading, retail traders use a capital of $100 or less. For novice traders, it is unlikely to open more than two positions with this kind of capital. It is why forex brokers offer a leverage of 1:20, 1:30,1:40, and more.
To boost their chances of opening more positions with leverage. If a forex trader wants to trade without any forex leverage, they can look for a forex broker with minimum forex leverage of 1:1.
List of Forex brokers who allow forex trading with a 1:1 margin:
1. XM
Founded in 2009, it is a forex broker that has served 1.5 million traders for more than ten years. Its clients can access commodities, stocks, metals, cryptocurrency, CFDs, metals, and Forex.
It has regulations from:
- Cyprus Securities Exchange Commission (CySEC)
- Financial Conduct Authority in the UK (FCA)
- Australian Securities and Investment Commission (ASIC)
XM has the highest leverage set at 1:888, but traders can start at 1:1. The margin requirements don’t vary as they would for some other brokers. They also give you the option to increase or reduce the leverage ratio.
It is one of the forex brokers where you can set your leverage at 1:1, which means you will trade without margin. New forex investors at XM use this option until they learn how to implement leverage trading.
(Risk warning: 75.59% of retail CFD accounts lose)
Features of XM
- It is very secure with a two-step verification when logging in.
- It has a demo account forex traders can use.
- It has an integrated MT4 and 5, trading platform, which has the industry’s best trading tools.
- It has a webinar available both online and offline.
- Its customer care is available 24/7 in 25 languages.
Pros of XM
- Quality forex trading educational resources
- It offers the best trading tools in the market
- It has a user-friendly interface for mobile, desktop, and web trading versions.
- It has a low forex deposit.
Cons
- Cryptocurrency CFDs is unavailable
(Risk warning: 75.59% of retail CFD accounts lose)
2. eToro
**Please note that instruments restrictions may apply according to region
Since it launched in 2007, it has attracted over 2 million investors to its trading platform. Financial markets you can access include commodities, indices, ETFs, Stocks, Forex.
It has regulations from:
- Financial Conduct Authority (FCA)
- Cyprus Securities and Exchange Commission (CySEC)
- Australian Securities Investment Commission (ASIC)
eToro is a forex broker with leverage for retail traders ranging from x1 to x30. That is according to the restrictions placed by the regulatory bodies. X1 is the same as 1:1, a setting for forex trading without margin.
The leverage varies from the area a trader is using its platform and the account. Expert forex traders can get more forex leverage than this using a professional trading account. Forex traders can access up to x30, and the other financial markets have lower forex leverage.
76% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you can afford to take the high risk of losing your money.
Features
- It has a demo account with $100,000 virtual currency for practicing trading.
- It has the leading trading tools for trading cryptocurrency.
- It uses a proprietary trading platform.
- It has a social and copy trading feature for its traders.
- It gives access to risk management strategies, like negative balance protection, stop-loss protection, and take-profit orders.
Pros of eToro
- Low initial deposit
- Low trading costs
- Has a wide range of forex and CFD options
- It is regulated by tier 1 and 2 jurisdictions.
Cons
- Does not support MT4 and MT5
76% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you can afford to take the high risk of losing your money.
3. XTB
It is a forex broker founded in 2002 and has operated for over 20+ years. XTB has a variety of trading instruments, Indices, commodities, forex, cryptocurrencies, and shares. It is regulated by the Financial Conduct Authority, which is a tier 1 regulatory institution.
It has leverage starting from 1:1, which traders who want to trade without margin can use. Its highest forex leverage is 1:500 based on the trader’s type of account. The leverage ratio varies with the asset the forex trader uses.
(Risk warning: 72% of retail CFD accounts lose money)
Features
- It has the MT4 and its X station 5 proprietary trading platforms.
- Comprehensive educational resources
- Technical analysis of different forex traders
- Negative balance protection
- It has trading tools like charts, indicators, and drawing tools.
Pros of XTB
- It has low trading fees.
- Quality customer care department
- Fast account registration and verification process
- Fast transactional processes
Cons
- It has limited trading instruments.
(Risk warning: 72% of retail CFD accounts lose money)
4. Forex.com
It is a forex broker founded in 2001 and is a global CFD trader. it has licenses in many forex trading economies, including the New York Stock Exchange market.
It has registration from the top regulators in the forex industry:
- National futures association in the US
- Commodities Futures Trading Commission (CFTC)
- Financial conduct authority (FCA)
- Japanese Financial Services Authority (JFSA)
- Investment Industry Regulatory Organisation in Canada (IIROC)
Forex.com has leverage that starts from 1:1 for forex brokers who don’t want to risk anything using margin. The highest forex leverage goes up to 1:500, but traders in the EU and US can access up to 1:50. The margin rates depend on the type of financial market and the currency you are trading.
(Risk Warning: Your capital can be at risk)
Features
- Over 100 technical indicators, several drawing tools, and advanced charting software.
- It has integrated its proprietary trading platform, MT4, and MT5.
- Quality research materials from forex trading experts.
- Extensive educational materials.
- Research from Forex.com experts and third parties like Trading central.
Pros of Forex.com
- Quality trading tools
- Low trading fees
- A wide range of currency pairs to choose from
- Fast execution rates
- Fast registration process
Cons
- It has no negative balance protection
(Risk Warning: Your capital can be at risk)
Conclusion – You can trade with a 1:1 margin at some of the top brokers
Margin trading is something that most forex traders consider using when they join the forex trading industry. It has attracted many forex investors to forex trading since it has no interest and traders can access high leverage.
Forex trading without margin is impossible for most online forex brokers, they have an option for traders to choose a 1:1, or lower leverage than 1:50.
FAQ – The most asked questions about Forex brokers without margin :
Can you trade forex without leverage?
Yes, it is possible to trade forex without leverage, but you will need a high capital to sustain a couple of trades.
What are mistakes that forex traders make when they trade with no margin?
Ignoring risk management because they are not using any leverage. Even when you are not using margin it is crucial to apply the risk management strategies.
What is the recommended margin to use when trading forex?
Several forex regulatory bodies ensure that traders within their jurisdiction use a margin less than 1:50. ESMA guidelines for the UK forex traders recommend less than 1:30 for most financial markets.
What does forex trading margin mean?
Margin is the sum of money that a trader must advance in order to open a position. You simply need to pay a portion of the total position value to open trade while trading forex on margin.
Can you trade forex without a margin?
Without a margin, you are unable to make orders with the broker since you cannot borrow any funds from them. The margin usage rate, which accounts for the amount of money moved from your account, will still fluctuate in your account.
How does margin work in forex?
Margin is only a percentage of your money that the forex broker sets aside from the balance of your account to maintain your trade open and to guarantee that you have enough money to pay any potential losses. For the length of the particular trade, this share is “utilized” or “locked up.”
Can you profit from the margin?
When you acquire on margin, you take out a loan from the broker and utilize the extra cash to buy more commodities than you can with the money you have on hand. Investors can increase their returns through margin purchasing, but only if their assets outperform the loan’s cost.
Last Updated on January 3, 2024 by Andre Witzel
