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live micro UK acc. and MMR,leverage
Please, I have question.
On Micro demo account I have balance of 50.000 $. Pip Cost is 0,1 and MMR for eur/usd is 7,50. If I make market order for Amount(K) = 20, then I get 2$ per pip (20 * 0,1 = 2 $) and the Usd Mr = 150.
If I deposit in real Micro account (FXCM UK) 500$, is it also pip cost 0,1 and MMR 7,50 for eur/usd??? I want also to make orders for Amount(K) = 20 or even 50; and get 2$ per pip (5$ pip). I know this is more risky on just 500$, but I need to know.
On 500$ account is order of amoutn(K) = 20 equeal to lervarage 400:1 ???
20 K = 200 000 / 400 = 500$ . Am i correct?
Hello ik3412, and thank you for your post! On behalf of myself and everyone here at FXCM, welcome to the forum community!
What is the maximum leverage for FXCM LTD (UK) Standard and Micro accounts?
The maximum leverage for FXCM LTD (UK) Standard accounts is 200:1. The maximum leverage for FXCM LTD (UK) Micro accounts is 400:1. Please click on one of the links below for more information:
Please click here (Margin Trading and Leverage FAQ)for more information about where to find the minimum margin requirements and please click here (Margin Trading and Leverage FAQ)for more information about where to find PIP costs on the Trading Station platform. If you were to place a 20K trade with $500 in an account then your effective leverage would be at 40:1.
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 email@example.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 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 mikro2nd!
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:
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 ik3412! Please feel free to post with additional questions or contact me directly at firstname.lastname@example.org
Originally Posted by ik3412
Last edited by Julius at FXCM; 05-20-2012 at 05:58 PM.
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Disclaimer: Trading foreign exchange on margin carries a high level of risk, and may not be suitable for all investors. The high degree of leverage can work against you as well as for you. Before deciding to trade foreign exchange you should carefully consider your investment objectives, level of experience, and risk appetite. The possibility exists that you could sustain a loss of some or all of your initial investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with foreign exchange trading, and seek advice from an independent financial advisor if you have any doubts. Any opinions, news, research, analyses, prices, or other information contained on this website is provided as general market commentary and does not constitute investment advice. Forex Capital Markets LLC. will not accept liability for any loss or damage, including without limitation to, any loss of profit, which may arise directly or indirectly from use of or reliance on such information.