1. Trading on margin

CFDs and spread bets are leveraged products, which means that when you open a position you will be required to fund your account with a percentage of the full value of the trade. This is referred to as the Margin Requirement (or initial margin), and the minimum margin requirements for each asset class are set out on the Market Information Sheets that are available here.

Whilst trading on margin allows you to magnify your returns, your losses will also be magnified as they are based on the notional value of the position. This means that if you are a retail client and the market moves against you, it is possible that you could lose all of your invested capital. However, as a retail client, you will receive negative balance protection, and as a result, it would not be possible to incur losses that exceed the value of your account.

2. Maintaining open positions

After opening a position you are required to maintain sufficient funds in your account on an ongoing basis to ensure that you meet any Margin Requirement. This is also referred to as maintenance margin and is based upon the marked to margin valuation (a revaluation that takes into consideration any profits or losses caused by adverse movements in the market) of your open position. For further information please refer to the below:

MT4
For retail clients trading on our MT4 platform, the value of your account will be calculated on a real-time basis whilst the maintenance margin requirement is calculated using the applicable price of the position at the close of each trading day. If as a result of adverse market movements you have position(s) that are losing money, you must ensure that you maintain additional funds needed to cover any Margin Requirement and P&L (see maintenance margin above). If you do not maintain sufficient funds in your account, or close some or all open positions and the market continues to move against you, your account will be subject to a Margin call.

OREX
For retail clients trading on our OREX platform, the value of your account (including any open positions) will be calculated on a real-time basis. If you have any position(s) that are losing money, you must ensure you maintain the additional funds needed to cover any margin requirement and P&L (see maintenance margin above). If you do not maintain sufficient funds in your account, or close some or all open positions and the market continue to move against you, your account will be subject to a Margin call.

3. Margin call

If the market moves against you, your original deposit that opened the position may no longer be enough to continue to meet the margin requirement in order to maintain the position, and you may become subject to a margin call. A margin call is when the equity on your account, being the total amount deposited plus or minus any profits or losses, falls below the Margin Requirement.

If this happens, you will be required to either deposit additional funds into your account or close some (or all positions) in order to meet your margin requirement. At this point, if you do not deposit sufficient funds in time and /or the market continues to move against you, your positions become at risk of being automatically closed out in order to reduce the margin requirement on your account.

Therefore it is important to ensure that you monitor your account at all times and maintain sufficient, cleared funds in order to avoid a margin call and the automatic close out of some or all of your open positions.

4. Margin close-out process

If you fail to deposit additional funds to provide sufficient equity into your account, and/or the markets continue to move against you, you are at risk of being subject to an automatic close-out of some or all of your open positions. Should the free equity (please see above) on your account fall to 50% or below the required margin level, we will commence the closure of your open positions. Subject to the underlying market trading hours, priority will be given to the largest losing position(s).

For example:

If the current close-out percentage (margin level) is 50% and you have four trades open that each requires £500 worth of position margin, your total position margin requirement will be £2,000. If your account revaluation amount then drops to less than 50% of the total margin requirement, in this case, £1,000, some or all of the trades constituting this position may be closed out, potentially at a loss to you.

ADSS utilises two trading platforms – MT4 and our proprietary platform OREX. Some of the close-out terminology and processes may differ depending on the platform, and a description of the process is summarised by the platform below.

5. When will client positions be closed on MT4?

Positions will be automatically closed if client equity drops to 50% or below the applicable margin requirement. In MT4 this is captured using a term called margin level.

Margin Level = Equity/Margin

• Margin will be calculated based on the opening price of the position and will be revalued at market price with the close of business each day for all open positions
• Client will be on margin call once the margin level breaches 100%
• Client will be automatically closed out once the Margin level breaches 50%

The notification of a margin call appears (in red) on MT4 as a notice that a client account has breached the minimum required level of equity and any open trades are at risk of being closed out.

If you have any open positions, it is your responsibility to ensure that you are aware of our close-out process, and ensure that you monitor your account at all times to avoid being subject to a margin call. MT4 will reduce your exposure by closing one, several or all open margin positions or part of an open margin position in the account until you have returned to above the 50% level. We will do so without assuming any responsibility towards the client.

However, it is important to note that markets can move very quickly and this means that we may not be able to contact you before your positions are automatically closed. For example: in volatile market conditions it is possible for your equity to fall from 100% of margin to below 50% in seconds, and where this occurs it may not be possible for us to provide you with any notification via the platform.

6. When will client positions get automatically closed on OREX?

Positions will be automatically closed if your equity drops to 50% or below the required margin. If you trade via our proprietary OREX platform, this is shown using the term “used margin percentage”, which means once your used margin reaches 200%, any open positions will be subject to an automatic close out.

Used Margin = Margin / Equity

The margin call alert via OREX will be issued once your account has breached the level of equity in the above table, and in the event of any margin call your open trades are at risk of being automatically closed out.

Please note that whilst we will endeavour to provide you with an alert as set out in the above table, it is important to remember that during volatile or fast-moving markets we may not be able to provide you with an alert before your positions are subject to an automatic close-out. For example, if your equity drops from above 100% of margin to 50% or below in less than five seconds, we will not be able to provide you with an alert(s).

7. Negative balance protection

If you are a retail client and your account goes into a negative balance, as part of our negative balance protection guarantee, ADSS will bring your account back to zero at no additional cost to you.

8. Professional clients

Please note that negative balance protection is not available to professional clients and therefore it is possible to incur losses that exceed deposits.