Margin & Free Margin problem on BackTest ? - page 2
You are missing trading opportunities:
- Free trading apps
- Over 8,000 signals for copying
- Economic news for exploring financial markets
Registration
Log in
You agree to website policy and terms of use
If you do not have an account, please register
Look at the Contract Specifications to find out ...
tks you, what is mean 50000 in your photo ?, and that is my screenshot
When in doubt, consider referencing the documentation ...
Documentation on MQL5: Constants, Enumerations and Structures / Environment State / Symbol Propertieshello @ Fernando Carreiro
As promised I've just had a look at the two links you gave me, so far so good I haven't learnt anything new, but there is one question I'm asking myself which doesn't make sense to me:
Why aren't there more fees if you trade with a leverage of 30 or 500?
I understand that there is more risk, but if the risk is calculated, how come a broker doesn't charge more for higher leverage and vice versa?
I'm talking about CFDs, of course,
I have contacted my broker and he tells me that no, there are no higher charges for higher leverage.
Example on EUR/USD a position of 0.01 Lot :
- with leverage 30, the margin required is : 33,33€
- with leverage 500, the margin required is : 2€
I find it strange to use high leverage at no extra cost. Maybe our broker is waiting for us to do something stupid and get ourselves wiped out, or maybe there's something else I'm missing ?
Best Reguards,
ZeroCafeine.
hello @ Fernando Carreiro
As promised I've just had a look at the two links you gave me, so far so good I haven't learnt anything new, but there is one question I'm asking myself which doesn't make sense to me:
Why aren't there more fees if you trade with a leverage of 30 or 500?
I understand that there is more risk, but if the risk is calculated, how come a broker doesn't charge more for higher leverage and vice versa?
I'm talking about CFDs, of course,
I have contacted my broker and he tells me that no, there are no higher charges for higher leverage.
Example on EUR/USD a position of 0.01 Lot :
- with leverage 30, the margin required is : 33,33€
- with leverage 500, the margin required is : 2€
I find it strange to use high leverage at no extra cost. Maybe our broker is waiting for us to do something stupid and get ourselves wiped out, or maybe there's something else I'm missing ?
Best Reguards,
ZeroCafeine.
Leverage is how brokers incentivise more trading, by offering an indirect "loan", that they will never lose out on.
The more you trade, the more they profit in commission and spread, irrespective of which the trader profits or loses in their trading.
hi Fernando Carreiro
thank you very much for your reply, I hadn't thought about that aspect, it's true that with more margin you can take more positions and therefore pay the fees and different commissions several times over.
So, apart from being stupid and greedy and miscalculating your risk, there are no hidden costs.
tks again,
Best Reguards,
ZeroCafeine 😊
Example on EUR/USD a position of 0.01 Lot :
- with leverage 30, the margin required is : 33,33€
- with leverage 500, the margin required is : 2€
I find it strange to use high leverage at no extra cost. Maybe our broker is waiting for us to do something stupid and get ourselves wiped out, or maybe there's something else I'm missing ?
Hi ZeroCafeine,
If by "extra cost" you mean commissions there is nothing strange about that, as they are calculated for example at $3.75 per 1.00 lot traded, i.e. it really is a percentage thing.
As it has been said before, leverage is a "trap" that we must take into account in money management and only use it to gain free margin based on a lower cost of the lots, but never use it to overleverage and step on the accelerator (metaphorically speaking).
And what is the point of having more free margin if I don't use it? To be able to sleep with the peace of mind that your account will not explode in the first "flashcrash" (remember that if the price moves too fast the SL will be executed at the quoted price and will not be respected, the same for the TP ... in short; slippage), and have a greater margin of "errors" (losing trades).
As it has been said before, leverage is a "trap" that we must take into account in money management and only use it to gain free margin based on a lower cost of the lots, but never use it to overleverage and step on the accelerator (metaphorically speaking).
I totally agree with this idea, leverage must be used with great care, I know I'm not and never will be super man,
And what is the point of having more free margin if I don't use it? To be able to sleep with the peace of mind that your account will not explode in the first "flashcrash" (remember that if the price moves too fast the SL will be executed at the quoted price and will not be respected, the same for the TP ... in short; slippage), and have a greater margin of "errors" (losing trades).
I also understand and agree with you on this point of view, one of the ideas, for example, of using leverage would be to put a small part of your capital with the broker and use leverage as if it were all your trading capital,
That way, at the very least, if I do anything with my trading account or if the broker disappears, at least it'll just be a part of my capital.