buying

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Hi,


sorry for that stupid question, but : What does MT do, when I tell him to buy currency, which I dont have money to buy with ? I mean : Go long on USD/JPY with brand new account in euros. Why does it let me do this trade when i have no YENS ?


thnx, Jan

 
HanziCZ :

Hi,


sorry for that stupid question, but : What does MT do, when I tell him to buy currency, which I dont have money to buy with ? I mean : Go long on USD/JPY with brand new account in euros. Why does it let me do this trade when i have no YENS ?


thnx, Jan

Hi Jan,

I could answer you in czech, but this is english forum :)

The key concept behind this is margin. When you open position on a currency pair, your account is checked for the required margin not the amount of currency you are actually buying!

If your margin account is denominated in USD your margin per transaction is calculated in USD. If you trade eurusd the value of the transaction in USD is the amount of euro X value of eurusd.
Retail forex brokers always quote the industry convention namely eurusd (i.e. eur in terms of usd). That means a 10K eurusd transaction = EUR10,000 and that is if eurusd value = 1.4000 = $14,000. Your 1% margin required will be 1% of $14,000 = $140.00.

If you have further questions, PM me and I'll try to answer.

Petr D.

 

Ahoj,

I am in USA but would like to teach some non English speaking Czechs how to use MT4.

Is there any CZ forum for MT4?

 
ioudas :
HanziCZ :

Hi,


sorry for that stupid question, but : What does MT do, when I tell him to buy currency, which I dont have money to buy with ? I mean : Go long on USD/JPY with brand new account in euros. Why does it let me do this trade when i have no YENS ?


thnx, Jan

Hi Jan,

I could answer you in czech, but this is english forum :)

The key concept behind this is margin. When you open position on a currency pair, your account is checked for the required margin not the amount of currency you are actually buying!

If your margin account is denominated in USD your margin per transaction is calculated in USD. If you trade eurusd the value of the transaction in USD is the amount of euro X value of eurusd.
Retail forex brokers always quote the industry convention namely eurusd (i.e. eur in terms of usd). That means a 10K eurusd transaction = EUR10,000 and that is if eurusd value = 1.4000 = $14,000. Your 1% margin required will be 1% of $14,000 = $140.00.

If you have further questions, PM me and I'll try to answer.

Petr D.

sorry for such a noobish BS again :) So this is the real meaning of leverage, that every FX broker speaks about on his web to atract people into trading. The fact, that i can do trades with volume, that exceeds my input money 100 times. And I can do several such trades with one amount of money :) Now I really understand the risk of it :D

Is there a "non speculative" kind of broker ? I mean, that the trading would be more like what you do in real exchange office(excet for an insane spreads :) ). No leverage and the amount of money you can trade determined by what you have really bought ... like to go long on GPBJPY you must have bought some JPY previously ? And where some 70k CZK would still mean a money ?

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