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Thread: Horrible first question on leverage

  1. #1
    So if I start a top leverage account $100 with 100:1 and


    I move negative. Account is wiped out. Am I really on the hook for $10,000? Can my broker send the Russian Mafia on me?

    Considering how little $100 is in theory and how 90 percent of traders fail in forrex seemingly I am just wondering.

    Sounds like alot of first risk for what's usually small profits compared.

    I am having extremely consistent very good runs in presentation and ready to put theory to function just wondering if I understand everything correct.


    My target for 2016 isn't to make millions of dollars. haha

  2. #2
    el
    Guest
    Some brokers have negative equilibrium protections. It had been implemented by several brokers after the CHF collaps. Many traders owed a lot of money to brokers and that I guess a few still do.

    It's unlikely that account will wind up with negative balance in case you manage your risks. When it is a smalle negative equilibrium then I think most brokers won't do anything. You can just change the broker and that's all.

    All brokers have a particular margin call level wherever your transaction will be shut.

  3. #3
    Right, Leverage is ONLY the place you're permitted to open.

    So with a leverage of 100:1, using a $100 account, you would have the ability to exchange with $100,000, which will provide you the capacity to exchange with 0.01 lots (an equal margin of 1 percent)

    That would indie that using an account of $100 you woudl be in a position to exchange with 1 trade of 0.01 lot... You would be unable to open any more trades, as you woudl have consumed all your margin.

    At 200:1, you would have 0.5 percent margin, meaning two trades of 0.01 lots could be opened or 1 trade of 0.02 lots.

    Hope you could see the more margin, only permits you to open 1 enormous lot, or multiple small lots. It has nothing to do with how much you could lose or gain per say.

    In addition to that, you will have a margin call at most brokers wherever your equity value goes below 20%. While this happens, they will begin closing the most unprofitable trades one by one before your equity rises above 20% (but of course your account will pretty much be blown!)

    You will have the ability to draw the $20gt; sum, and you will not owe the broker whatever.

    Oh, also 100:1 is not high leverage!!! That's pretty much the standard, from 50:1 (that I find quite restrictive, especially on higher timefames where you may have a lot more loions opened) to 300:1 is fairly standard - 500:1 and you're starting to push it a bit, as you can open lots more rankings, but you're more likely to get a margin call....

    Similarly, in the event that you went into a negative balance, you woudl only be on the hook for your place - ie the points value would stay exactly the same, which means you wouldn't end up needing to cover $100,000 - you would only have to pay the minus pips * your lot size, ie, 100 pips beneath the adverse balance @0.01 lot, you would owe $10.

    Forex is not painful, and in case you've got a controlled broker, you should be fine. If you stay away from the silly leverage (1000 and up) you should be just nice.

    Leverage is efficiently How much you really need in your account to open up a situation, the higher the leverage, the less of your account is necessary to open it.

  4. #4
    Quote Originally Posted by ;
    Right, Leverage is merely the position you are allowed to open. So with a leverage of 100:1, with a $100 account, you'd have the ability to trade with $100,000, which would give you the ability to trade with 0.01 lots (an equal margin of 1 percent) That would mean that with an account of $100 you woudl be in a position to trade with 1 commerce of 0.01 lot...
    Ahm, 100*100 is 10,000 which is equal to 0.1 lot, not 0.01.

    Quote Originally Posted by ;
    Forex is not worrisome, and if you have a controlled broker, you should be OK. If you steer clear of the absurd leverage (1000 and up) you should be just nice.
    I agree. I really don't think much about leverage, I think about number of pips to kill or double my account which leads to a far diminished leverage with AUD/USD compared to GBP/USD for instance. The issue is risk appetite as well as the trading fashion. For instance: using exact entrances on the reduced time frames while still avoiding highly volatile times allowes for a much greater value per pip than going longer duration where you have to give some more space.

    Quote Originally Posted by ;
    My goal for 2016 is not to be millions of dollars in debt. Haha
    That is a more than reasonable goal.
    If you're more of a short term trader it is in fact quite simple to significantly lower your risk of debt to your broker. Just avoid news and don't have transactions open over the weekend. Some mad ones at a decade (or so) events like the SNB choice apart that is exactly what makes people lose more than they had on their account.

  5. #5
    Quote Originally Posted by ;
    if you moved into a negative balance, you'd only be on the hook for your place - ie the things value would remain exactly the same, which means you would not end up needing to cover $100,000 - you'd just have to pay the minus pips * your lot dimensions, ie, 100 pips beneath the adverse balance @0.01 lot, you'd owe $10.
    Solid explanation!

  6. #6
    Stop out ensures that you will not be in debt.

  7. #7
    Quote Originally Posted by ;
    Cease ensures that you won't be in debt.
    No, it does not. Weekend gap, big slippage during very important news releases both in comparison with higher leverage is what puts you into debt because prevent out or stop loss do not apply under these circumstances.

  8. #8
    Quote Originally Posted by ;
    Stop out ensures that you will not be in debt.
    Fore convinced NOT!
    Especially with a true ECN.

    A stop is an order , which can be executed or not, is determined by has a counterpart or not and your broker how can he love to play you!
    In January 2015 many CHF stops weren't executed on time price, only a lot lower and the traders are in charge nevertheless !

  9. #9
    Quote Originally Posted by ;
    quote Fore sure NOT! Especially with a true ECN. A halt is an order , which can be implemented or not, is determined by has a counterpart or not and your broker how can he love to play you! In January 2015 many CHF stops weren't implemented on the time price, just a lot lower and the traders are in debts nevertheless !
    If your broker offers NBP then yes

  10. #10
    1 Attachment(s)
    Quote Originally Posted by ;
    quote If your broker offers NBP then yes
    When it provides subsequently is a MM, and then you'll have other issues because of extreme market conditions Virtual spike of 80-160 pip. . Where about the SL is stuffed the TP not, your winner transactions are deleted... many others, check my posts, I have posted with FXPro a spike such as 80 pip from the air

    This is another drama in case how MM are working:
    https://forexintuitive.com/forex-tra...reen-pips.html
    You can judge whether is fake or real or how are your money handled at brokers.

    Better go to church each week or maybe all day If You're trusting a MM

    Even a True ECN has rare cases, which can be exceptional and it occurs just with you and nobody

    Good luck with Negative Impact protection and guaranteed Cease loss execution and welcome bonuses

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