When you use EUR or GBP as collateral for futures trading, a small FX haircut is applied when your collateral is converted into USD for margin and risk purposes.
What is a haircut?
A haircut is a percentage reduction applied to the value of your collateral to account for short-term FX fluctuations between USD and your collateral currency. This keeps margin requirements stable, especially during periods of high market volatility. The current haircut is 1%.
There is no haircut if you use USD as collateral — the haircut only applies to EUR or GBP collateral.
How is my equity calculated?
We calculate your total equity in USD using the most recent FX rate, then apply the haircut.
Example:
- You have 100 EUR in your account.
- The current EUR → USD FX rate is 1.15 (1 EUR = 1.15 USD).
- Your equity in USD: 100 EUR × 1.15 (FX rate) × 99% (haircut) = 113.85 USD
How FX rates affect your positions
Your open position continues to fluctuate based on market price movements as usual. However, because futures are priced in USD while your collateral may be held in EUR or GBP, changes in FX rates can affect the USD value of your collateral. Significant FX movements may increase your margin requirements and can lead to liquidation, even if the market price of your position stays relatively stable.
For more details on liquidations, see A Guide to Futures Liquidations. For more on the risks involved, see our Risk Disclosure.
If you have any questions, our support team is happy to help.
Investing involves risks. The value of investments can go up as well as down and you may receive back less than your original investment or lose your entire investment. Investing with leverage means the value of your investment fluctuates more than the price of the underlying asset. One Trading does not provide investment advice and investors should make their own decisions or seek independent advice.