MIG vs Northfinance Margin Requirement

I have a question for anyone who has the knowledge to help me. I had a demo account with MIG with a balance of $5000 and 100:1 leverage. I have 4 trades open of 0.5 lots each and the margin kept by MIG is $1087. All the trades are in profit. The margin percentage shows 685%. I have 7 trades of 0.5 lots open in Northfinance demo. Some are in profit and some marginally negative (only few pips). The leverage on the Northfinance demo is also 100:1 and account size was $5000. The margin they keep is my whole $5000 and I cannot open any more trades. The margin percentage shows 100.25%. Why does Northfinance keep so much back and why is it different from MIG although the leverage on both are the same? Previously I could open a lot more than 7 trades on MIG without the margin coming to the total of my whole account.

I would appreciate anyone that could assist me. I need to sort these things out before I attampt trading with my own money.

As you have discussed, one of the major reasons I went with MIG was leverage and margin, but actually there were many more important reasons.

With a live account (not demo) they have confirmed to me in writing that they always provide a 200:1 leverage -- which I like since nothing forces me to use it.

With a live account, they also enforce margin requirements only after the close of trading every Friday -- during the week there is no check and no margin calls at all. Even after Friday night, unlike other brokers, they do not just sell every position you hold, but only the one with the week-end margin call. This is a very enlightened broker, utterly unlike commercial brokers I have seen anywhere else. This also fits my trading style, since I always close all positions before trading is halted on Friday, so I will never get a margin call no matter what.

MIG does require a minimum of $2,000 to open a live account, and are required by the Swiss government to make you fill out a very long and highly bureaucratic application form -- but I still did it in about an hour. The only problem was a requirement to provide a notary certified copy of my passport, but I understand the need for all this, which is designed to make money laundering impossible.

Actually one reason I decided to go with a Swiss Broker was that they appear to be the only place in this world where Forex brokers are actually regulated by their government -- certainly they are not in the US. For example, the Swiss government rescently temporarily shut down a broker (not MIG) due to inadequate IT operations -- certainly none in the US need worry about that from our government.

Another thing they let me do which is different, is that they allowed me to denominate my capital funds in Euros, even though I sent them dollars by wire transfer (the only way they will receive or return money is by wire transfer). Since they do not pay interest on unusued capital funds (does anyone?) I figured that Euros are a much more stable currency than is the dollar, so at least my capital funds are not depreciating in terms of global currencies. The numbers are a little different, but this is no problem for a real currency trader who is used to such things.

Another thing I really like about MIT is that they have the lowest spreads I have found anywhere, which is mostly just 2 pips, with a few only at 3 pips. No currency I would ever trade has a spread higher than 3 pips. Their spreads are fixed, with no slippage. Since I have been cheated by the dealing desk of some US brokers, this was a real requirement for me. They also don't care if you trade by scalping. And since capital gains are not taxed by Switzerland, you are not taxed by them, and their privacy laws prevent them from reporting it to anyone else. Note however that a brokerage is not considered a bank in Switzerland, and you are not allowed to open a bank account there if you are a resident of the US.

Charles Wilkes, San Jose, California

Hi Charles

Thank you for your detailed and lengthy response. I liked them during the demo, but got worried reading about slippage etc on other sites with regard to MIG. This made me think that it might not be a great idea to open my live account with them. From your response I might be wrong and I should maybe stick with them.