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Whats The Difference between Usd Mr and Usd Maint Mr
Whats The Difference between Usd Mr and Usd Maint Mr
I have two trades open and these are 2,300 and 9,200 (yen on a yen denominated demo).
The two MMRs are AUD/USD Y4,000 and EUR/JPY Y5,200.
From this I assume that the Usd Maint Mr is the margin I have used, so what s the other?
Have I missed some thing?
Hello pippydogy, and thank you for your post!
What is the difference between Usd Mr and Usd Maint Mr?
For FXCM LLC (US), FXCM LTD (UK), and FXCM AU (Australia) accounts, Usd Mr and Usd Maint Mr both show you the same information: how much margin you have put down to hold open positions.
What is Margin?
Margin is the good faith deposit that you put down in order to hold open positions. This is not a fee or a transaction cost, it is simply a portion of your account equity set aside and allocated as a margin deposit. The margin that you put down to hold open positions is always used from the money that you have available in your account.
Margin requirements at FXCM are determined by taking a percentage of the notional trade size plus a small cushion. A cushion is added to help alleviate daily/weekly fluctuations. For more information on how margin is calculated please click here (Margin Trading and Leverage FAQ).
In the event that funds in the account fall below margin requirements, all open positions are triggered to close. This is designed to prevent clients' accounts from falling into a negative balance, even in a highly volatile, fast-moving market.
You can check the minimum margin requirements for all the pairs and how much each pip movement is worth for a 1K trade (the minimum trading size on your account) from the simple dealing rates window in the Trading Station II platform.
Take a look at the top left hand corner of the trading station, then click on "Simple Dealing Rates" which is next to "Advanced Dealing Rates". Once there scroll to the right and you will notice "Pip Cost" and "MMR". Pip cost will tell you the value of a pip movement per 1K trade for any pair, and MMR will give you the minimum margin requirement per 1K trade for any pair. If you take a look at the image below, the area highlighted in green illustrates how the Pip Cost for EUR/USD is 10 cents, and the MMR for USD/JPY is $10.
So if you were to place a 1K trade for EUR/USD, each pip that moves in your favor or against your favor would be worth ten cents. If you were to place a 2K trade for EUR/USD, then each pip that moves in your favor or against your favor would be worth 20 cents, and so forth.
Now using USD/JPY as an example for margin, from the illustration if you were to place a 1K trade for USD/JPY, then the minimum margin requirement is $10. That means that you have to have at least $10 in your account to be able to hold a 1K position of USD/JPY. If you were to place a 2K trade for USD/JPY, then the minimum margin requirement is $20 and so forth.
Please keep in mind that your minimum margin requirement will depend on where your account is regulated, and what leverage you have your account set to. For the most updated FXCM Standard account margin requirements please click here. If you have an FXCM Micro account please click here.
Also keep in mind that when you are placing a trade the "Create Market Order" window will automatically calculate the Pip Cost and MMR for you as you manually type the size of your trade in the Amount(K) field.
How can I monitor how much margin I have put down and how much available margin I have in my account?
If you look in the accounts window on the top right hand corner of the trading station you will see where it says "Usd Mr" and "Usbl Mr".
Usd Mr is the good faith deposit you put down to hold open positions and Usbl Mr is the rest of the money you have in your account to open more positions, or sustain additional losses. If the market moves in your favor, your Usbl Mr will rise. If your Usbl Mr ever moves down to zero, you will receive a margin call (Margin Trading and Leverage FAQ) and all your positions will be liquidated. This will ensure that you will never owe FXCM money. Your Usd Mr and Usbl Mr will always add up to your equity.
Your equity is the most accurate reflection of floating profits and losses (or the balance) in your account.
Please note that it is the client’s responsibility to monitor their own margin and manage it accordingly. FXCM does not send clients notifications when their margin is running low. FXCM highly advises its clients against over-leveraging their accounts. When an account is leveraged to a high degree, the probability of receiving a margin call dramatically increases.
Why is lower leverage important in order to improves 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.
Question: What happens to Trader A account equity when the USD/JPY price falls 100 pips against him?
Answer: Trader A loses 41.5% of his / her 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 with 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 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 firstname.lastname@example.org and I will be more than happy to set you up with a trial version of DailyFX+.
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 pippydogy! Please feel free to post with more questions or send me an email directly at email@example.com
Originally Posted by pippydogy
Last edited by Julius at FXCM; 11-13-2011 at 11:10 PM.
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