A Question about Spread - page 2

To add comments, please log in or register
Deevog
2303
Deevog  

They only reason risking account like you said is leverage and a broker already mentioned on top of they website so when you use high leverage your account can see margin call easily 


NELODI
189
NELODI  
Using an account with high leverage does not automatically result in high risk or margin calls. What does result in high risk and margin calls is over-exposure (also called over-trading), which happens when a trader keeps opening positions just because they can, without thinking about the possible consequences of a trade that keeps moving against them. Most people blow up their accounts because they can not accept the fact that their initial assumption about the direction of the trade was wrong, so they keep that position open and either add more volume to the losing trade, hoping that it is going to turn, or they start hedging losing trades, hoping to save money by changing the direction of the trade. But fact is, if the market is trending and you just keep trading against it, you are going to lose. And your loss is going to be proportional to your exposure (open volume), not the leverage you have available.
Abigail Quigley
317
Abigail Quigley  
Waseem Raza:

Any broker can wider their spread any time, and because of this low margin or  close SL hits, If you asking about top class brokers with best conditions then I'm sure that brokers not using MT4/MT5  but using their own platforms for trade but their trade conditions are best. 

Is that so? I used to use another broker who had their own platform and I found them appalling when I switched to MT4 I thought it was great. Please expand on the differences 
Waseem Raza
10385
Waseem Raza  
Abigail Quigley:
Is that so? I used to use another broker who had their own platform and I found them appalling when I switched to MT4 I thought it was great. Please expand on the differences 

Mostly brokers have their own and MT4/MT5  too platforms but world top class brokers still using their own , After 2000 and 2008 a lot of brokers comes with ordinary regulation and claimed they are top class even you can't check they are True ECN or Not but they comes with big leverage and offers small trading accounts as a result peoples loose only , now under FCA you can get only 1:30 Leverage it means your safe, 

When you said your account was 98% risked it means all fault because of leverage , You can google to search a USA broker (They are not using MT4/MT5 so far) and then read their history but not fake reviews of brokers on different ranking webs 

Sergey Golubev
Moderator
112855
Sergey Golubev  

There is one thread in Russian part of the forum where the users are trying to find some free tools/websites/etc to monitor the spread for many brokers/pairs in real live incl the history of the spread (for example, at night, and so on).

For example:

Forum on trading, automated trading systems and testing trading strategies

Are there different brokers monitoring and spread statistics at night?

Andrey Khatimlianskii , 2019.10.07 01:36

There is a powerful spread monitoring on the fly swat. A search on forex-broker-spreads will help.


As I understand:

  • "fly swat" is myfxbook website, and
  • "forex-broker-spreads" is myfxbook[dot]com/forex-broker-spreads

You can use google to find it because I do not want to promote the external service sorry.

    Enrique Dangeroux
    550
    Enrique Dangeroux  
    Waseem Raza:

    Mostly brokers have their own and MT4/MT5  too platforms but world top class brokers still using their own , After 2000 and 2008 a lot of brokers comes with ordinary regulation and claimed they are top class even you can't check they are True ECN or Not but they comes with big leverage and offers small trading accounts as a result peoples loose only , now under FCA you can get only 1:30 Leverage it means your safe, 

    When you said your account was 98% risked it means all fault because of leverage , You can google to search a USA broker (They are not using MT4/MT5 so far) and then read their history but not fake reviews of brokers on different ranking webs 

    It is not at all fault of leverage. Leverage did not trade the account. Did you check the busted signal before posting this?

    Regarding 98%. If the broker would have set a reasonable stop out level, the account would not have gone into the minus and i am pretty sure the broker does not have the negative balance as debt to the LP. 

    NELODI
    189
    NELODI  
    Enrique Dangeroux:

    It is not at all fault of leverage. Leverage did not trade the account. Did you check the busted signal before posting this?

    Regarding 98%. If the broker would have set a reasonable stop out level, the account would not have gone into the minus and i am pretty sure the broker does not have the negative balance as debt to the LP. 

    Brokers will usually trigger a Margin Call and start closing your losing positions one-by-one when your account balance drops below 50% of your available margin, but .. if your account is highly leveraged and the market is highly volatile, your account can actually go below zero quite a bit when you have a lot of exposure (open volume) on trades that keep moving against you. And if you do end up with a negative balance on your account, you will have to make a deposit to bring your account to zero, or face the consequences (lawsuit?). But the fact is that a Broker is NOT responsible for closing your trades. You are. And even if you have a stop loss, when the market is highly volatile and the liquidity is low, there is NO guarantee that all your positions will be closed before your account drops below zero. If that happens and you do make a deposit to bring your account back to zero, some Brokers might offer you to credit your account for the amount you have deposited, but that is not a general rule, it depends entirely on the Broker. Brokers under FCA regulation (Europe) have to offer negative balance protection to non-professional traders, but they only offer up to 1:30 leverage, which might be too low for some traders.

    Brian Rumbles
    1004
    Brian Rumbles  

    Hi Abigail, you cannot think about the $11K that was closed out and ask about the broker giving it back. The reason for this is that it is known as a sunk cost. In accounting and Economics a sunk cost is any cost that has already been occurred in the past and therefore nothing can be done about it. Therefore any future decisions need to be made without having any regard for the past cost. The new decisions must be the best decisions for the current circumstances and not to make up for past circumstances, this is the most optimal to minimize losses.

    In other words the only number that matters is the equity, account balance does not mean anything. Its is the past. 

    Thinking that only closed out trades count and that unrealized trades do not yet count is known as the sunk cost fallacy that most people (it is very natural) fall into.


    The spread may widen due to low liquidity conditions which means no one is there to take the other side of your trade, so bid and ask spread widens to compensate for the lack of willingness.


    If you really do believe you could have rescued your account from 98% drawdown, your next step is very simple. You deposit 2% of the original equity amount and you take huge trades and try to grow the amount by 50 times. I do not think there is even one person out there who can achieve this though. It is a sunk cost

    Waseem Raza
    10385
    Waseem Raza  
    Enrique Dangeroux:

    It is not at all fault of leverage. Leverage did not trade the account. Did you check the busted signal before posting this?

    Regarding 98%. If the broker would have set a reasonable stop out level, the account would not have gone into the minus and i am pretty sure the broker does not have the negative balance as debt to the LP. 

    Do more study to understand how a leverage can kill you , it's very simple , Borrowing someones money and doing trade doesn't works  

    NELODI
    189
    NELODI  
    Waseem Raza:

    Do more study to understand how a leverage can kill you , it's very simple , Borrowing someones money and doing trade doesn't works  

    You are partially right. Having access to a leveraged account, without understanding how leverage works, is eventually going to kill your account. But it's not the leverage that kills the account. It is your understanding or miss-understanding of how leverage works, and trading without a plan and/or proper risk management, that eventually kills your account. With a decent trading strategy, leverage is actually a good thing, because it gives you more capital to work with, even if it does mean that you are trading with borrowed money.

    In fact, with 500:1 leverage, you can even trade Forex with only $20 USD on your account, which limits your losses to only $30 USD (your initial deposit, plus the potential risk of your account blowing up completely), while you learn how to trade with real money. The alternative would be to deposit $2000 USD on an account without any leverage (1:1), then opening one trade with 0.01 volume and watching it go against you, until you decide to close it with a loss and try again. You could do the same on a highly leveraged account and your risk would actually be lower, because margin requirements on leveraged accounts are lower, which is the whole point of using leverage (reduced margin requirements for opening trades).

    Or ... if you have a lot of capital, trade in real stocks, without using any leverage. That's what wealthy people do to preserve their capital.

    123
    To add comments, please log in or register