Margin, Leverage and deposit

Dua Yong Rew
5737
Dua Yong Rew  

What is their relationship?

Why do people say leverage can multiply your profit/losses?

I always thought I use my balance to support my trade. Does leverage makes a big difference?

Alain Verleyen
41039
Alain Verleyen  
Dua Yong Rew:

What is their relationship?

Why do people say leverage can multiply your profit/losses?

I always thought I use my balance to support my trade. Does leverage makes a big difference?

Never to late to understand it. Of course it makes a huge difference. If there was no leverage (1:1) you would need at least 100,000 € in your account to trade a standard lot of EURUSD.

For the details please do some researches, there are plenty resources about that on this site or Internet.

Dua Yong Rew
5737
Dua Yong Rew  
Alain Verleyen:

Never to late to understand it. Of course it makes a huge difference. If there was no leverage (1:1) you would need at least 100,000 € in your account to trade a standard lot of EURUSD.

For the details please do some researches, there are plenty resources about that on this site or Internet.

I'm more interested in supporting the trade. You still need $10 for every pips against you no matter the leverage?
Fernando Carreiro
5138
Fernando Carreiro  
Dua Yong Rew: I'm more interested in supporting the trade. You still need $10 for every pips against you no matter the leverage?

The Pip Value is irrespective of the leverage and is not affected by it.

When accessing your Risk you actually have to calculate both of them to manage your risk.

  • You have to calculate the Pip Value Risk based on your Stop Size.
  • and you have to calculate your Margin (Leverage) Requirements for the Position Size planned.

In my own code I calculate the maximum position size on both a Maximum %Risk (for the Stop Size) and Maximum %Margin (for the Margin Requirements) parameters.

I then selected the smaller of the two calculated positions sizes so that both limits are met. That way, the position size will be properly calculated irrespective of what Leverage is in effect.

Dua Yong Rew
5737
Dua Yong Rew  
Fernando Carreiro:

The Pip Value is irrespective of the leverage and is not affected by it.

When accessing your Risk you actually have to calculate both of them to manage your risk.

  • You have to calculate the Pip Value Risk based on your Stop Size.
  • and you have to calculate your Margin (Leverage) Requirements for the Position Size planned.

In my own code I calculate the maximum position size on both a Maximum %Risk (for the Stop Size) and Maximum %Margin (for the Margin Requirements) parameters.

I then selected the smaller of the two calculated positions sizes so that both limits are met. That way, the position size will be properly calculated irrespective of what Leverage is in effect.

So margin is more related to the deposit right. So how is the pip value risk relate to the deposit?
Fernando Carreiro
5138
Fernando Carreiro  
Dua Yong Rew:
So margin is more related to the deposit right. So how is the pip value risk relate to the deposit?
Pip-Lot value has no relation to deposit or balance. It is a fixed value based on the symbol properties.
Fernando Carreiro
5138
Fernando Carreiro  
Dua Yong Rew:
So margin is more related to the deposit right. So how is the pip value risk relate to the deposit?
How is it that you sell products, yet don’t understand such basic concepts as leverage, margin requirements, pip value and risk calculations?
Dua Yong Rew
5737
Dua Yong Rew  
Fernando Carreiro:
How is it that you sell products, yet don’t understand such basic concepts as leverage, margin requirements, pip value and risk calculations?
Do I need to understand that to be successful?
Fernando Carreiro
5138
Fernando Carreiro  
Dua Yong Rew:
Do I need to understand that to be successful?
To succeed at trading, yes!

To trick and scam users into buying your products, probably not!
Dua Yong Rew
5737
Dua Yong Rew  
Fernando Carreiro:
To succeed at trading, yes!

To trick and scam users into buying your products, probably not!
Well, can you show me your successful results to learn from you?
Fernando Carreiro
5138
Fernando Carreiro  
Dua Yong Rew:
Well, can you show me your successful results to learn from you?
And why would I show you that?

Why would I want to teach you?

What would motivate me to do so if I am alread happy with my own profits?