Thread: 1:400 leverage how far?

hi,

i asked to fxcm support but i didn't get an answer.

here is the question.

if i deposit my account with 10K USD, and after that if i earned 100K USD or 1M USD (it's dream of course i know), in this case, what happens to my leverage? still 1:400?

Thanks

Hello kermens, and thank you for your post! On behalf of myself and everyone here at FXCM, welcome to the forum community!


Will the leverage on my account change based on my account equity?

No, the leverage on your account will not change unless you request to change it.


How can I change the leverage (or margin) for my account?

If you have an FXCM LLC (US) account, the leverage is set to 50:1 on the majors, and 20:1 on the exotics. For a full list of the margin requirements for FXCM LLC (US) accounts, please click here.

For UK or AU regulated accounts, please follow the simple steps below to change the leverage (or margin) for your account.

Step 1. Please visit MyFXCM.com and log in with the same information you use to log in to your live account.

If you do not have your user name or password, please click on the "Forgot Login/Password?" link to either retrieve your user name or reset your password.

Please click here (Trading Station II Login Help) for a visual instructions on how to reset your password.


Step 2. Once you are logged in, please click on the Change-Margin Request link.

Step 3. On this page, you will be able to change your margin from the drop-down menu indicated below. Please choose your new margin settings accordingly and then click on "Submit".

You will then see the request confirmation page.

It can take up to 1 - 3 business days to process your request, although it often takes less time.

Step 4. When finished, please be sure to log out.

Why is lower leverage important in order to improve one's chances of being successful in the long term?

One of the main reasons that new traders lose money is because they over-leverage their account by opening too large of a position, too many positions, or a combination of both. When you use excessive leverage, a few losing trades can quickly offset many winning trades. To clearly see how this can happen, consider the following example.

Scenario: We have four different traders trading on different levels of effective leverage.

Questions: What happens to Trader A account equity when the USD/JPY price falls 100 pips against them?

Answer: Trader A loses 41.5% of his account equity.

By using lower leverage, Traders B, C, and D drastically reduce the dollar drawdown of a 100 pip loss. Please keep in mind that it is not uncommon for currency pairs to range at least 100 pips a day. By over-leveraging his account, Trader A has lost almost half of his equity in just one trade. We believe that using 10:1 effective leverage on an account is a good general rule of thumb, or never having more than 1K of open exposure for every $100 of equity in the account.

Does lower leverage really work?

FXCM's experience in Hong Kong, where significantly lower leverage levels are mandated by law, suggests lower leverage results in more successful trading. As another example, many professional traders use up to 8:1 leverage and typically much less. The reason to use low leverage is to make sure that a losing position does not make a significant negative impact on the overall account.


How can I use lower leverage?

The DailyFX.com Research and Education team has created a variety of trading videos to help you identify trading opportunities using lower leverage. To learn more about money management and the benefits of trading with lower leverage, log into the DailyFX+ Trading Course. Once you are logged in simply click on "Money Management" on the left.

For those who don't have a live account with us yet that's ok!

Please feel free to send me an email at julius@fxcm.com and I will be more than happy to set you up with a trial version of DailyFX+.


What is more important, the margin requirements on the account or the effective leverage applied to the account?

Keep in mind that the margin requirements on your account is not so much as important as the effective leverage that is applied to the account. As previously mentioned here at FXCM we believe that using no more than 10:1 effective leverage on an account is a good general rule of thumb in order not to over leverage the account, or never having more than 1K of open exposure for every $100 of equity in the account. Let's use a numerical example in order to better understand this concept.

Let's say that there is $5000 in an account. If I am going to follow the 10:1 effective leverage rule then that means that I am not going to open more than 50K it total positions at any given time. A few examples of this include but are not limited to not opening more than:

• One 50K trade at once.

• Two 25K trades at once.

• Five 10K trades at once.

If there is 50K in total open positions on a $5000 account, if you are using no more than 10:1 effective leverage then more positions will not be opened until some are closed out. I tend to use about 3:1 to 5:1 effective leverage on my personal account.

Please click here to read an excellent article on effective leverage written by Jeremy Wagner, our valued Lead Trading Instructor. It's one of a series of articles written on client profitability called: Building a Better Wheel: Incorporating Profitability Statistics. I hope you find that helpful kermens!


Based on my position sizes and trading style, it doesn't seem like have enough equity to maintain 10:1 effective leverage. How do I deposit funds?

Please click on the link below that corresponds what type of account you have for more information about depositing funds:

Standard Account Deposit FAQ (Deposit FAQ) | Micro Account Deposit FAQ (Deposit FAQ's)

Please let me know when you have made the deposit and I would be more than happy to help expedite the process for you. Thank you in advance for your time and I look forward to hearing from you soon!


Where can I find more information about Margin and Leverage?

For more information please visit our Margin and Leverage FAQs (Margin Trading and Leverage FAQ).


Thank you again for your post kermens! Please feel free to post with more questions or send me an email directly at julius@fxcm.com

Originally Posted by kermens

hi,

i asked to fxcm support but i didn't get an answer.

here is the question.

if i deposit my account with 10K USD, and after that if i earned 100K USD or 1M USD (it's dream of course i know), in this case, what happens to my leverage? still 1:400?

Thanks

Hi Julius,

Thanks for the answer. So i want to be sure. If i earned millions of dollars , my account type(micro) or leverage will not change right?

I mean i can trade with (i'm just dreaming) 1m$ equity with 1:400 leverage (so 400m$ leveraged equity) ?

Hello again kermens, and thank you for your post!


You are very welcome for that information, it is my pleasure to assist you!

Just to confirm, yes you are correct. If you have an FXCM LTD (UK) Micro account the maximum leverage is 400:1. No matter how much equity you have in your account, the maximum leverage for an FXCM LTD (UK) Micro is 400:1. The leverage on the account will not change unless you request to change it. If the leverage on your account needs to be changed for any reason without you requesting it (e.g. regulations require to lower the maximum leverage), you will most certainly be notified well ahead of time before the change is made.

As always please do not hesitate to reach out to me directly whenever any questions come to mind, if you need further assistance, or just to let me know how you are doing. Remember I am always here to help!


Thank you again for your post kermens! Please feel free to post with additional questions or contact me directly at julius@fxcm.com

Originally Posted by kermens

Hi Julius,

Thanks for the answer. So i want to be sure. If i earned millions of dollars , my account type(micro) or leverage will not change right?

I mean i can trade with (i'm just dreaming) 1m$ equity with 1:400 leverage (so 400m$ leveraged equity) ?

I'm new to forex and I just signed up for a MT4 demo account today.

I've been playing with MT4 today and noticed that there is no setting to change the leverage when I enter a trade. While searching in the forum, I came across this thread. After reading this thread, I thought it would be a good idea to use a low leverage of 5:1 for my trading. If I understand correctly, the default value of leverage is set to 50:1. How do I change it to 5:1 on my MT4 demo account? Also, is there a way to change the leverage for each trade when I open a position? Or, is it a fixed value for all trades once it's been set?

I don't have a live account at this moment and I cannot access DailyFX Plus to view the video that Julius recommends.

Hello Starblazer, and thank you for your post! On behalf of myself and everyone here at FXCM, welcome to the forum community!


How can I change the leverage (or margin) for my demo account?

At this time there is no option to change the leverage for demo accounts. For FXCM LLC (US) demo accounts the leverage is set to 50:1 on the majors, and 20:1 on the exotics. For FXCM LTD (UK) and FXCM Australia (AU) demo accounts the leverage is set to 200:1. Please click on the link below that corresponds to the type of FXCM MT4 demo account you would like:

FXCM LLC (US) | FXCM LTD (UK) | FXCM Australia (AU)

There is no restriction to how many demo accounts you can open; you can open as many demo accounts as you'd like. If you do not leave the demo account dormant for more than 30 days, then the demo account will never expire.


How can I change the leverage (or margin) for my live account?

If you have an FXCM LLC (US) account, the leverage is set to 50:1 on the majors, and 20:1 on the exotics. For a full list of the margin requirements for FXCM LLC (US) accounts, please click here.

For UK or AU regulated accounts, please follow the simple steps below to change the leverage (or margin) for your account.

Step 1. Please visit MyFXCM.com and log in with the same information you use to log in to your live account.

If you do not have your user name or password, please click on the "Forgot Login/Password?" link to either retrieve your user name or reset your password.

Please click here (Trading Station II Login Help) for a visual instructions on how to reset your password.


Step 2. Once you are logged in, please click on the Change-Margin Request link.

Step 3. On this page, you will be able to change your margin from the drop-down menu indicated below. Please choose your new margin settings accordingly and then click on "Submit".

You will then see the request confirmation page.

It can take up to 1 - 3 business days to process your request, although it often takes less time.

Step 4. When finished, please be sure to log out.

How can I set up my live account for leverage lower than 50:1?

Many professional money managers typically use less than 50:1 leverage. Some examples include 10:1, 8:1, and even 5:1! FXCM offers various solutions to the suit the needs of your trading style and strategy. If you would like to set the leverage of your account to less than 50:1 please fill out the Margin Change Request form that is attached to this post and send it to our dedicated operations team at one of the email addresses below:

Standard Accounts: admin@fxcm.com | Micro Accounts: admin@fxcmmicro.com

Please allow up to 2 - 3 business days for the operations department to respond to your request.


Why is lower leverage important in order to improve one's chances of being successful in the long term?

One of the main reasons that new traders lose money is because they over-leverage their account by opening too large of a position, too many positions, or a combination of both. When you use excessive leverage, a few losing trades can quickly offset many winning trades. To clearly see how this can happen, consider the following example.

Scenario: We have four different traders trading on different levels of effective leverage.

Questions: What happens to Trader A account equity when the USD/JPY price falls 100 pips against them?

Answer: Trader A loses 41.5% of his account equity.

By using lower leverage, Traders B, C, and D drastically reduce the dollar drawdown of a 100 pip loss. Please keep in mind that it is not uncommon for currency pairs to range at least 100 pips a day. By over-leveraging his account, Trader A has lost almost half of his equity in just one trade. We believe that using 10:1 effective leverage on an account is a good general rule of thumb, or never having more than 1K of open exposure for every $100 of equity in the account.

Does lower leverage really work?

FXCM's experience in Hong Kong, where significantly lower leverage levels are mandated by law, suggests lower leverage results in more successful trading. As another example, many professional traders use up to 8:1 leverage and typically much less. The reason to use low leverage is to make sure that a losing position does not make a significant negative impact on the overall account.


How can I use lower leverage?

The DailyFX.com Research and Education team has created a variety of trading videos to help you identify trading opportunities using lower leverage. To learn more about money management and the benefits of trading with lower leverage, log into the DailyFX+ Trading Course. Once you are logged in simply click on "Money Management" on the left.

If you don't have a live account with us yet that's ok!

I will send you an email to provide a trial version of DailyFX PLUS so that you can use these great resources with your demo account. If anyone else needs one please feel free to send me an email at julius@fxcm.com and I will be more than happy to set you up with a trial version of DailyFX PLUS.


What is more important, the margin requirements on the account or the effective leverage applied to the account?

Keep in mind that the margin requirements on your account is not so much as important as the effective leverage that is applied to the account. As mentioned here at FXCM we believe that using no more than 10:1 effective leverage on an account is a good general rule of thumb in order not to over leverage the account, or never having more than 1K of open exposure for every $100 of equity in the account. Let's use a numerical example in order to better understand this concept.

Let's say that there is $5000 in an account. If I am going to follow the 10:1 effective leverage rule then that means that I am not going to open more than 50K it total positions at any given time. A few examples of this include but are not limited to not opening more than:

• One 50K trade at once.

• Two 25K trades at once.

• Five 10K trades at once.

If there is 50K in total open positions on a $5000 account, if you are using no more than 10:1 effective leverage then more positions will not be opened until some are closed out. I tend to use about 3:1 to 5:1 effective leverage on my personal account.

Please click here to read an excellent article on effective leverage written by Jeremy Wagner, our valued Lead Trading Instructor. It's one of a series of articles written on client profitability called: Building a Better Wheel: Incorporating Profitability Statistics. I hope you find that helpful Starblazer!


Based on my position sizes and trading style, it doesn't seem like have enough equity to maintain 10:1 effective leverage. How do I deposit funds?

Please click on the link below that corresponds what type of account you have for more information about depositing funds:

Standard Account Deposit FAQ (Deposit FAQ) | Micro Account Deposit FAQ (Deposit FAQ's)

Where can I find more information about Margin and Leverage?

For more information please visit our Margin and Leverage FAQs (Margin Trading and Leverage FAQ).


Thank you again for your post Starblazer! Please feel free to post with more questions or send me an email directly at julius@fxcm.com

Originally Posted by Starblazer

I'm new to forex and I just signed up for a MT4 demo account today.

I've been playing with MT4 today and noticed that there is no setting to change the leverage when I enter a trade. While searching in the forum, I came across this thread. After reading this thread, I thought it would be a good idea to use a low leverage of 5:1 for my trading. If I understand correctly, the default value of leverage is set to 50:1. How do I change it to 5:1 on my MT4 demo account? Also, is there a way to change the leverage for each trade when I open a position? Or, is it a fixed value for all trades once it's been set?

I don't have a live account at this moment and I cannot access DailyFX Plus to view the video that Julius recommends.