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Standard UK account, Can leverage be increased to 1:400 like micro?
Maximum leverage on a standard UK account is 1:200.
Can it be increased to 1:400 like micro accounts?
Do standard accounts and micro accounts work the same way apart from the differences (such as CFDs, 24/7 live support) listed at http://forexforums.dailyfx.com/upgra...ml#post678721? (Benefits of Upgrading to an FXCM Standard Account)
Are price feeds, spreads, liquidity providers, etc the same? Will execution quality be the same on both types of accounts?
Hello xterm, and thank you for your post! On behalf of myself and everyone here at FXCM, welcome to the forum community!
Do standard accounts and micro accounts work the same way apart from the differences (such as CFDs, 24/7 live support) listed at Benefits of Upgrading to an FXCM Standard Account?
The features and functionality of the Trading Station platform for both FXCM Standard and FXCM Micro accounts (both considered FXCM retail accounts) are exactly the same. Our FXCM retail accounts have no commissions. Once you open the account each time you place a trade you pay the spread. The spread is the only cost to you when you are trading with us. FXCM Standard and FXCM Micro accounts have the same spreads. If you open an FXCM Standard or Micro account through an in-house FXCM sales agent you will be seeing the same live price feed and spreads as any other retail client of ours would see.
What is the spread?
You will always see a two-sided quote in FX. In your FXCM account you will be shown a sell price and a buy price from the "Advanced Dealing Rates" window to the left in the Trading Station. They can also be referred to as the “bid” and “ask” respectively. The difference between the two prices is called the “spread”. The sell and buy price are highlighted below in green, and the spread is highlighted in red.
FXCM makes money by making a small markup on the spread (which is typically a pip) and it is the only way FXCM is compensated.
What this means to you:
We make the same amount of money when you place a trade regardless of whether or not you are profitable on that trade. But in reality we want you to be a profitable trader, because if you are profitable that will increase the chances of you continuing to trade with us long-term, and if the account size grows you may even begin to trade in larger sizes. So as you can see, this eliminates any potential conflict of interest between the broker and the client. That is why we dedicate time and money to provide an abundance of educational resources with hopes that it will improve client profitability. We don't benefit from customer losses.
How am I charged based on the spread?
Clients are charged 10 cents per pip, per 1K trade. Using a numerical example, let's say the spread on EURUSD is 2 pips. If you were to place a 1K trade when the spread is 2 pips, you would pay 10 cents per pip, so in this instance you would pay 20 cents.
(1K)(.10) = ten cents per pip
(.10)(2pips) = .20 or twenty cents
If you were to place a 2K trade with a 2 pip spread, you would pay 40 cents, and so forth.
(2K)(.10) = twenty cents per pip
(.20)(2pips) = .40 or forty cents
So that means that you would be charged $1 per pip per 10K trade. Using a numerical example, let's say the spread on EURUSD is 2 pips. If you were to place a 10K trade when the spread is 2 pips, you would pay $1 per pip, so in this instance you would pay $2.
(10K)($1) = one dollar per pip
($1)(2pips) = $2 or two dollars
If you were to place a 20K trade with a 2 pip spread, you would pay $4, and so forth.
(20K)($1) = two dollars per pip
($2)(2pips) = $4 or four dollars
FXCM offers variable spreads. The beauty of variable spreads is that they can tighten during the most heavily traded hours for any give pair, and that can help reduce your transaction costs. Please click here for more information.
For more information regarding our spreads please click here. For more information regarding our execution model please click here.
What advantages do standard accounts have over micro accounts?
If you don't mind me asking, how much capital were you thinking about getting started with? I ask because standard accounts also have the functionality of trading micro lots (increments of 1K) available and offer many advantages over micro accounts. Some of the advantages to holding a standard account include but are not limited to:
- Different account denominations.
- Different account types and platforms.
Please click here (Benefits of Upgrading to an FXCM Standard Account) for more information on the advantages of having a standard account.
The minimum starting balance for a standard account is $2000. Please let me know if a standard account would be something of interest to you, and I will be more than happy to put you in touch with a specialist that can go over all your options. If you are looking to open a micro account, you can open one by clicking on the link below:
Please let me know when you have submitted your application and I would be more than happy to help you with the depositing process.
Do you have any type of account that offers even tighter spreads?
Yes we absolutely do offer that too xterm! Our Active Trader accounts have several other benefits in addition to those that you would receive from a standard account. Some of the advantages to holding an Active Trader account include but are not limited to:
- Up to 10 levels of market depth
- View available liquidity at each price level
- Reduced transaction costs
- Expedited services
The Active Trader platform is available to traders that make an initial balance of at least $50,000 or regularly trade 10M a month in trading volume.
Please click here for more information regarding Active Trader accounts.
Please let me know if a Standard Account or an Active Trader account would be something of interest to you, and I will be more than happy to put you in touch with an appropriate specialist that can go over all your options. Thank you in advance for your time xterm, and I look forward to hearing from you soon.
Can I increase my leverage to 400:1 with an FXCM LTD (UK) Standard account?
In order to best assist you with this question I will follow up with you by email. If you don't mind me asking, what was the reason that you wanted to have access to 400:1 leverage? I ask because 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 email@example.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:
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 xterm!
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:
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 xterm! Please feel free to post with more questions or send me an email directly at firstname.lastname@example.org
Originally Posted by xterm
Last edited by Julius at FXCM; 06-13-2012 at 09:07 PM.
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