Invest in FX with leverage

J

jcgtanaka

Greetings for you all,

I have a doubt regarding FX.

- I have my account in dollars and I want to invest in two pairs: EURUSD and GBPUSD,
- I want to use leverage
- I have 5000 dollars in my account
- Imagine the EUR costs 2.00 dollars and the GBP costs the same.
- I want to invest only 4,000 dollars, but I want to use a 4x leverage only
- I want to invest algorithmically using the Gateway API
- My question is: how should I do the transaction? I mean, what quantity should I put on the quantity input for the order for each forex pair?

Thanks in advance
 
Your statement is ambiguous, my best guess is you mean 4x leverage on $4000 rather than $4000 nominal:

4000 * 4 = 16000 dollar nominal position size in total (hence allocate $8000 to each pair)
(as leverage of total account: 16000 / 5000 = 3.2x leverage)

Now, to find a matching lot size for so small money, it may be challenging on IB unless you can use some sort of CFD or fractional lots. Other people will have to answer that since I haven't tried to trade currencies with them in a long time.

If you're willing to go the CFD route, then Oanda does support that small positions and has an API, but the spread is higher and thus worse for frequent trading with few pips/small percentage per trade than trading whole lots on IB... For swing trades several hours in length or above Oanda is fine though.
 
Snuskpelle said:
If you're willing to go the CFD route, then Oanda does support that small positions and has an API, but the spread is higher and thus worse for frequent trading with few pips/small percentage per trade than trading whole lots on IB... For swing trades several hours in length or above Oanda is fine though.
More...

I think Oanda actually might be cheaper than IB without having done the math.

The following currencies are given a lower spread than Oanda’s normal spread as they are very liquid:

EUR/USD
GBP/USD
EUR/GBP
AUD/USD
USD/CAD
USD/JPY

Both your prefered crosses are on that list. And as you with IB pay a fixed commission, it could be that the total is actually lower with Oanda on such low position sizes, as the IB commission is fixed per trade without regards to trade size

By the way, Oanda has an excellent API if you haven’t tested it out
 
El Trado said:
I think Oanda actually might be cheaper than IB without having done the math.

The following currencies are given a lower spread than Oanda’s normal spread as they are very liquid:

EUR/USD
GBP/USD
EUR/GBP
AUD/USD
USD/CAD
USD/JPY

Both your prefered crosses are on that list. And as you with IB pay a fixed commission, it could be that the total is actually lower with Oanda on such low position sizes, as the IB commission is fixed per trade without regards to trade size

By the way, Oanda has an excellent API if you haven’t tested it out
More...

Agree on everything. Yeah I didn't do the math either. To be fair I was just covering my ass for a potential "Oanda is just an expensive bucketshop!"-retort.
 
Last edited:
Thank you all very much for your responses, still, I insist in my question so I will change the values.

- I have my account in dollars and I want to invest in two pairs: EURUSD and GBPUSD,
- I want to use leverage
- I have 110,000 dollars in my account
- Imagine the EUR costs 2.00 dollars and the GBP costs the same.
- I want to invest only 100,000 dollars, but I want to use a 4x leverage only
- I mean: I want to buy 200,000 dollars of EUR (100,000 EUR, 50,000 dollars with 4 times of leverage) and 200,000 dollars of GBP (100,000 GBP, 50,000 dollars with 4 times of leverage).
- I want to invest algorithmically using the Gateway API
- My question is: how should I do the transaction? I mean, what quantity should I put on the "quantity" input for the order for each forex pair?
- When you code the market order, there is no input called "leverage" where to put the amount of leverage. There is only one input called "quantity" in which I should put the number
- So my reformulated question is: How much should I put on the market order quantity input in order to apply my only and specific 4x leverage for each pair.? I want to exactly apply a 4x leverage for each pair. I want my algorithm to work with only a 4x leverage for each pair. That's my main concern. For example, I could trade more pairs, but I want to exactly invest a 4x leverage.

Could you help me understand this situation please?

Thanks in advance
 
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