Margin Buffer Tests for Leveraged Accounts
Free margin can look abundant when markets are calm because open positions have not yet been tested together. The figure becomes meaningful only after estimating how it would change during adverse price moves, wider spreads, higher collateral requirements, and currency conversion. A buffer should absorb plausible stress without forcing hurried decisions.
In leverage trading, available margin is a moving result rather than money reserved in a separate vault. Equity changes with every position, and the provider’s requirements may change as volatility or event risk rises.
Convert Every Position Into Account Currency
Profits, losses, and margin may be calculated in currencies different from the account denomination. A weakening conversion currency can enlarge or reduce the account imp...