no leverage account get stopout
Even if trading with no leverage, your total accumulated loss can never be greater than your current balance and your equity can never drop below zero (unless your broker offers a credit balance).
So, make sure you "stop out" is not due to draw-down. Also, double check that all the contract details for the Custom Symbol you are using for the tests is in fact correct, including the Margin Call percentages.
Even if trading with no leverage, your total accumulated loss can never be greater than your current balance and your equity can never drop below zero (unless your broker offers a credit balance).
So, make sure you "stop out" is not due to draw-down. Also, double check that all the contract details for the Custom Symbol you are using for the tests is in fact correct, including the Margin Call percentages.
For example, if I load all my money in one asset and the asset drops for example 80% I mustnt need be stop out when it is not using leverage because it will not have a margin call.
Sorry, but that is not how it works. Running losses of open positions where the current price is on the opposite end of the opening price (a loss) for the position, has nothing to do with Margin or Leverage!
Your total accumulated running losses CANNOT be greater than your balance. Equity cannot go below 0.00, unless your broker specifically allows for a negative balance with a credit facility (which is very rare and requires collateral protection).
So, I repeat, irrespective of Leverage/Margin, current total running loss cannot be more than balance. Equity cannot be less than 0.00!
EDIT: By running loss, I mean that the sum of all running losses and profits together produce a final running loss! And this final loss cannot be greater than the balance.
EDIT2: This is why Martingale, Grid systems, or so-called hedging recovery systems eventually destroy your accounts, irrespective of leverage/margin. People just don't seem to understand that when your equity reaches 0.00 you have lost all your money and the account is dead.
Sorry, but that is not how it works. Running losses of open positions where the current price is on the opposite end of the opening price (a loss) for the position, has nothing to do with Margin or Leverage!
Your total accumulated running losses CANNOT be greater than your balance. Equity cannot go below 0.00, unless your broker specifically allows for a negative balance with a credit facility (which is very rare and requires collateral protection).
So, I repeat, irrespective of Leverage/Margin, current total running loss cannot be more than balance. Equity cannot be less than 0.00!
As I said before, I dont need credit facility. I bought the asset and I own it without any other costs after it until the day I sell.
As I said before, I dont need credit facility. I bought the asset and I own it without any other costs after it until the day I sell.
Lets simplify so that you can understand. Lets forget about Leverage or Margin. Lets talk real money.
You have a balance of $100. You buy 1 lot of EURUSD as if it were a CFD (which has pip-lot value of $10). The price goes down 10 pips. You have a running loss of $100 ($10 * 10 pips * 1 Lot). The Equity is now $0.00 You have lost all your money. Position is stopped-out and your account is closed! Do you understand now?
Lets simplify so that you can understand. Lets forget about Leverage or Margin. Lets talk real money.
You buy an asset1 A car for $25000.00 in real money (no leverage). A day later the car loses all its value, because the manufacturer closes due to bankruptcy, and the book value of the car is now $0.00. You have lost all the money you invested in that car. It is now worthless, but cannot be worth less then $0.
Same for an account without leverage. You have a balance of $100. You buy 1 lot of EURUSD (which as pip-lot value of $10). The price goes down 10 pips. You have a running loss of $100 ($10 * 10 pips * 1 Lot). The Equity is now $0.00 You have lost all your money. Position is stopped-out and your account is closed!
You say no leverage in your example with EURUSD but it is applying an 100x times if I'm not mistaking and BECAUSE THAT your position need be closed. Redo the example in the stock market and you will see that your talking nonsense. As I talk, I agree with you in leverage/margin.
You want to believe what you believe and you are not willing to listen to the reason you still get stopped out.
Equity = Balance + Running Profits - Running Losses.
When your equity is 0.00, there is no more money. It is gone! You cannot have a negative equity! It is so simple that even a kid selling lemonade in a corner stall can understand.
I give up! I don't have the patience to explain it further.
You want to believe what you believe and you are not willing to listen to the reason you still get stopped out.
Equity = Balance + Running Profits - Running Losses.
When your equity is 0.00, there is no more money. It is gone! You cannot have a negative equity! It is so simple that even a kid selling lemonade in a corner stall can understand.
I give up! I don't have the patience to explain it further.
I keep saying I agree with your explanation in a case that it is leverage environment. I know how the market work. I'll stop answering you. It is not helping me and not helping you.
I will repeat! It does not matter if you use Leverage or not. Even if you have an account with no leverage! It is the same rule!
Please understand that whether you have 1:1000 or 1:100 or 1:10 or 1:1, the answer is always the same!
You cannot have more running loss than the amount of balance. Equity can never be less than 0.00!
There is no SPECIAL case for 1:1 (no leverage). It is ALL the same! Can you PLEASE understand that!
I keep saying I agree with your explanation in a case that it is leverage environment. I know how the market work. I'll stop answering you. It is not helping me and not helping you.
If you would provide real example there would not be confusion.
Fernando is talking about Forex (or equivalent) and you are talking about stocks or Futures, which are not working the same.
There is not enough information to answer you usefully.
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Hi there,
What is the best way to do backtest with no leverage? My problem is that I'm doing some test with grid systems and it has been stop out with money to new positions. This stop out is not real because my loss position is very large but I don't have leverage so I should not need to cover the loss position to keep it. I couldn't find a way to turn it off. It is a backtest in a exchange broker.
What I'm doing to test without the stopout? I cloned the asset and set all margin requirements to zero, but I believe it is not correct do this way.
Thank you