Just clarifying margin for myself.

thread: Just clarifying margin for myself.

  1. #1
    Junior Member Castlewhite's Avatar
    28

    Just clarifying margin for myself.

    Ok, so here's my question.
    Account as follows, $5000 initial capital.
    1:100 leverage
    100k lot dimensions

    a pip=$10 P/L

    EURUSD requires about $1300 to be held margin per lot.

    So a margin call happens if equity drops below required margin of 1300.

    That renders $3700 left. Would that mean I would need to shed 371 pips($3710) if I purchase 1 lot before my position is closed?

    With daily market volatility for EURUSD being roughly 175 pips, purchasing 1 lot per $5000 will give me enough space to place a safe stop right?

  2. #2
    Junior Member Castlewhite's Avatar
    28
    ACK! I've been around this forum long, and that I believed I read via the beginner stickeys previously, but seemed to have missed the one you mentioned. Thx for the excellent nfo about true leverage.

    I'm a long-term swing trader, so I'd like my stop to become 100 away based on technical analysis.

    Therefore for ex:
    broker leveraged at 100:1, and a $5k first funding, I had idealy risk only 50 bucks. So I'd need to open 5 lots of 1,000 to achieve a 100pip stop.

  3. #3
    Ok, so here's my question.
    Account as follows, $5000 initial funding.
    1:100 leverage
    100k lot dimensions

    a pip=$10 P/L

    EURUSD requires about $1300 to be held margin per lot.

    So a margin call happens if equity falls below required margin of $1300.

    That leaves $3700 left. Would that mean I would need to lose 371 pips($3710) if I purchase 1 lot before my position is closed?
    This is accurate.

    With daily market volatility for EURUSD being about 175 pips, purchasing 1 lot per $5000 will give me enough room to put a safe stop right?
    There is no safe stop within this scenario. The scenario you describe above is extemely risky, too highly leveraged and is not trading. It's gaming, hoping for your big win.

    Please do yourself a huge favor and browse the Money Management tacky, here in the Beginners Forum. It insures risk, margin, leverage and position sizing in fantastic detail in the view of a trader who is treating trading like a business. After digesting the advoed sticky, you will better understand the danger of your scenario.

    Dial

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