Hi, I'm still trying MT4. Can anyone tell me where to define the leverage of every order? Since I don't need to do this until now.
Hi niva, surely it's not a silly question. If you are talking about margin requirement per 1 lot per pair, the leverage is set by your broker and can't be done from your MT4 platform. If you are talking about your capital leverage on the lot size, that will be a whole different story. Hope this help
I think I'm talking about the capital leverage of the lot size. According to the broker of the demo account, I can I have 1:1 to 1:200 choices. If I only give a minimum deposit like $100. Can I have leverage 1:100 or lesser? What are the general options among the brokers? 1:200 is way to risky, 1:100 is 'risky the second'.
The mini account of those brokers are pretty good for me as a newbie. What are the size of trade good for me? Need advices. Please PM me if you don't like to reply at here.
The requirements of most brokers is their posted margin percentage.
Your open positions multiplied by the leverage and then multiplied by
the margin percentage will give you the final number.
margin requirement is 5%
deposit is $100.00
open position: $5.00 (just for this demonstration, your broker may/may not
allow such a lot size)
Leverage: 100 to 1
Formula: position x leverage x 5% = margin requirement
So, : $5.00 x 100 x 5% = $25.00
If you are just starting out it's best to use as little leverage as you can.
Sure, leverage is a great thing, but it's also a two edged sword since it
can take as well as give. I imagine you want to get started with your trading,
but it's best if you preserve your capital as much as you can while you are
learning. Later on, when you become a more experienced trader, you can opt
for the leverage that suits your taste.
nice tips, now I understood.
Hi, I want to continue this question. Because I read some rule from a typical broker. It says, if Margin level is less than 10 percent the dealers have the right to begin to close positions starting from most unprofitable, while Margin level = 5 % all positions are getting closed forcedly in the automatic mode at the current price.
For example, I deposit $200, use 1:100 leverage open a position of $10,000. How much could be the 10% and 5% senarios? Or my understandind is just not rignt.
Okay, I'll try my best to help.
Trading 10,000$ position with 1:100 leverage will give us :
10,000$ / 100 = 100$ as the margin requirement.
So 5% and 10% from margin requirement 100$ is :
5$ and 10$.
So if have 3 open position, your broker will start to close from the most unprofitable position if your account drop to
3 x 10$ = 30$ .
If you still have 2 open position after the account drop below 10% level, the broker will close all your open position if your account drop to
2 x 5$ = 10$ .
Hope I didn't confuse you with my answer
real account verifying, and demo account is dead. no reply from broker.
How does one calculate 'margin level'.?
I want to open the maximum number of positions I can using different stratergies - but i don't quite know when to stop opening. When 'margin level' = 50%?
If I know how to calculate margin level then I can determine what my 'margin level' will be if all my positions hit their 'Stop losses'. So I can continue adding positions until this calc returns 50%.
OK Niva, I'm going to give this a shot too.
Going by your above numbers, it implies that you are trading to get $10.00 per pip. I'm glad this is just theory, otherwise that would be bad because you could get stopped - and lose all your account - if your position went in the opposite direction by only 8 pips.
If your broker says he will close your account when you no longer have enough margin to support all your open positions, in the above example that would be only only 8 pips (hardly enough!)
Let me explain the term "margin"
It means slack or buffer. It's an amount the broker requires to make sure your position can take a certain beating or volatility. Sometimes when you open a new trade it will go in the opposite direction than what you figured, and then it will travel back to the way you want it to go...if you have enough liquid in your account to withstand that back and forth motion, that's margin, slack or buffer.
Most experienced Forex traders don't risk any more than about 2% of their total account in each trade. Furthermore, if they are in a very topsy-turvy market, they might even allow extra margin for a crazy market.
BTW, a $200.00 is very small! If you are going to go in with only that (or not too much more) I would say to get a micro account. So you'll know: even a $1,000.00 account is very small to play Forex.
Depending on what are your broker's margin requirements, you should always leave way more than that in your account to have the extra slack.
If you would be so kind as to post the exact details of the margin requirements I would give your more info.