WHAT DOES THE 70% MARGIN RULE MEAN?
Margin is the portion of your account capital that the broker locks as collateral to hold a leveraged position.
It is not your stop-loss risk and not the amount you can lose on a trade. Margin is a capital usage and leverage constraint, not a performance metric.
1. WHAT MARGIN MEANS IN SIMPLE TERMS
When trading leveraged products such as Forex, indices, or gold, you control a large notional position with a relatively small deposit. The broker requires margin to protect against short-term price movements and to ensure all obligations can be met.
If too much margin is used, even normal intraday fluctuations can trigger a margin call or forced liquidation, regardless of how good the trading strategy is. This is why margin rules exist — for stability and capital protection, not to judge trading skill.
2. HOW THE 70% MARGIN RULE IS CALCULATED AT NEOMAAA
NeomAAA applies the margin rule per position or per trade idea, not on the account as a whole.
Calculation:
Position Margin Usage (%) =
Margin Required for the Position ÷ Account Reference Equity × 100
Margin Required for the Position: the broker’s margin requirement for the open position or aggregated trade idea, including all entries belonging to the same idea.
Account Reference Equity: the account equity at the moment the position is opened, used as the base for risk and margin checks.
A position is considered in breach if Position Margin Usage exceeds 70% at any time while the position is open.
3. WHY MARGIN MATTERS EVEN IF YOU USE A STOP LOSS
Many traders focus only on chart structure and stop-loss placement, but margin is about survivability during volatility and execution risk.
Margin acts as a leverage limiter, preventing traders from holding positions so large that the broker could liquidate them before the strategy has time to work.
Common factors that increase margin pressure include:
Spread widening during news events or low-liquidity periods
Slippage that skips stop-loss levels, temporarily increasing exposure
Multiple scale-ins that cumulatively raise margin usage, even if each entry seems small
A trade can be correct in direction and still be liquidated if margin usage is too high. This rule exists to protect the firmfrom outsized losses during volatile market conditions.
4. WHY NEOMAAA MEASURES MARGIN PER POSITION, NOT PER ACCOUNT
The purpose of this rule is to prevent a single trade idea from turning the account into a one-bet portfolio, where most or all capital is concentrated in one position.
Such concentration significantly increases blow-up risk and operational exposure for the firm. NeomAAA’s per-position margin control is specifically designed to prevent single-position dominance and enforce professional risk distribution.
5. CLEAR EXAMPLE
If your account equity is $10,000 and the broker-required margin for your open position is $7,200, then:
7,200 ÷ 10,000 = 72%
This situation breaches the 70% margin rule.
6. WHAT HAPPENS IF YOU BREACH THE RULE
A first occurrence typically results in a soft breach, which may include a warning or temporary restriction, depending on frequency and context.
Repeated breaches escalate to a hard breach, leading to account termination, in accordance with the firm’s escalation policy.
7. PRACTICAL WAYS TO AVOID MARGIN BREACHES
Professional traders stay compliant by following these best practices:
Reduce lot size or overall notional exposure
Avoid stacking multiple entries in the same direction without recalculating margin impact
Exercise caution during news releases and low-liquidity sessions
Size risk by stop loss first using the 3% per trade idea rule, then confirm that margin usage remains below 70%