No More 200:1 Leverage

baggerlord · Oct 8, 2003

I think you would be crazy to use that 200:1 anyways. I get max 30:1 and don't feel comfortable using more than half of it. 30:1 is still way more than you need.

msfe · Oct 8, 2003

the risk lies in the leverage ... not in the margin

the higher the margin the lower the risk of "overtrading"

better try the CFTC-regulated CME/GLOBEX currency futures first imo ... the broker commissions are easily offset by narrower b/a spreads

compounding · Nov 7, 2003

Quote from baggerlord:

I think you would be crazy to use that 200:1 anyways. I get max 30:1 and don't feel comfortable using more than half of it. 30:1 is still way more than you need.

Perhaps, a bit off topic, but where are good places to get a leveraged account (4:1 overnight or more) for equity and/or option trading for a non-licensed day/swing trader?

blb078 · Nov 7, 2003

Quote from compounding:

Perhaps, a bit off topic, but where are good places to get a leveraged account (4:1 overnight or more) for equity and/or option trading for a non-licensed day/swing trader?

if you have the minimum 25k most places will give you 4:1 in equity, if not you would have to go to a prop firm, you can look at the broker ratings on the home page to see some of them.

corvus · Nov 7, 2003

Hey bro...what has been said is true in alot of ways...with futures or forex, the money/contract is only a bond. So, it's not really that important, save that now, if you are not making $, you will only be able to trade down to $200 instead of $50 before refilling your account. With $1/pip, you have a sufficient runway to learn on first without burning yourself too deeply.

OddTrader · Nov 7, 2003

Quote from ArchAngel:

Risk is the same, the difference is how much bond/margin you need to have to put on each lot. You're going to lose whatever you're going to lose regardless of how much the bond/margin is and you could always lose more than the initial bond/margin if the position suddenly goes sharply against you.

So if you're learning to trade, you've got no business trading more than a 1 lot. And if you're quibbling about posting $50 vs. $200 for that 1 lot, you are WAY too undercapitalized and shouldn't be trading at all.

How many lots were you planning on trying to trade with only a $500 account?

Your RISK is (potential loss/lot)*(# of lots) - amount of margin/bond is irrelavent - check your account documents, your maximum loss is NOT limited to the amount you have in your account.

Good luck.

imo, one thing also important is a comparatively small amount of deposit could not support a reasonable fluctuation of price that would stop you out easily - a very effective tatic being offered by many market makers in FX!?

corvus · Nov 7, 2003

Quote from OddTrader:

imo, one thing also important is a comparatively small amount of deposit could not support a reasonable fluctuation of price that would stop you out easily - a very effective tatic being offered by many market makers in FX!?

Not at $1/pip.

OddTrader · Nov 7, 2003

Quote from corvus:

Not at $1/pip.

I would think it all depends on how many lots, the defined amount of each lot, and what maximum % loss of capital per trade.

dnaj65000 · Nov 7, 2003

Corvus,

You're absolutely correct. I thought it out and did the math and it doesn't matter if it's not 200:1. I actually trade 10:1 or sometimes 20:1 depending if I have 1 or 2 mini lots open. I realized that if I really need the extra margin to give my positions more wiggle room, it means that my entry sucks! LOL!

Incidentially, I talked to the Refco customer support representatives and they told me that they haven't heard from their supervisors that the margin requirements are going to be raised to 2%. It's less than a month before the Dec 1st deadline and I would think that they would of sent out an email 30 days before any impending changes. So since they have not (yet), the margin for mini accounts might stay at 0.5%.

DNAJ65000

funky · Nov 7, 2003

Quote from dnaj65000:

I was initially attracted to the high leverage because it would only cost me $50 per mini lot. So by keeping my account really small (close to the minimum of around $300-$500) I could learn to trade the FX market without much risk.

However, if the FX broker now requires me to put up $200 per mini lot, I have to have a bigger account to trade...therefore more risk for me.

DNAJ65000

that made no sense.