Hi guys, I am a newbie operating a demo account. My concern is that my trades executed themselves twice depleting my account from 4461$ to 129$. I had buy orders and the prices on GBPUSD have been falling so I had minus on my profits. Someone please shed more light on this, thanks in advance. Don
Probably you have a high leverage and you took out a very large position.
For example, lets say you have a 1:500 leverage ratio and you open 1.0 Lot Buy order, which would requires £200 of margin. So you thought, £200 of $4461 (aprox. £3438) is only 5.8% so I am OK!
However, what you did not contemplate, is that at 1.0 Lot, each pip is worth $10. So if your trade goes against you for 100 pips, you just lost $1000.
Now if you happen to have 5 orders open and each lost 100 pips, that is 5 x $1000 = $5000 and your account gets cleaned out completely!
Moral of the story: Trading requires knowledge and understanding of how it all works. Trading requires math (and lots of it)!
So, do your homework. Do extensive research on the matter. Prepare to be at it for several years before you gain the necessary knowledge and skill to even consider becoming profitable.
Probably you have a high leverage and you took out a very large position.
For example, lets say you have a 1:500 leverage ratio and you open 1.0 Lot Buy order, which would requires £200 of margin. So you thought, £200 of $4461 (aprox. £3438) is only 5.8% so I am OK!
However, what you did not contemplate, is that at 1.0 Lot, each pip is worth $10. So if your trade goes against you for 100 pips, you just lost $1000.
Now if you happen to have 5 orders open and each lost 100 pips, that is 5 x $1000 = $5000 and your account gets cleaned out completely!
Moral of the story: Trading requires knowledge and understanding of how it all works. Trading requires math (and lots of it)!
So, do your homework. Do extensive research on the matter. Prepare to be at it for several years before you gain the necessary knowledge and skill to even consider becoming profitable.
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Hi guys, I am a newbie operating a demo account. My concern is that my trades executed themselves twice depleting my account from 4461$ to 129$. I had buy orders and the prices on GBPUSD have been falling so I had minus on my profits. Someone please shed more light on this, thanks in advance. Don