Help! Looking for a U.S broker with no leverage... (1:1) to practice with

Broker Discussion Forex Brokers
1

Hi there!

I am in the States and would love to find a broker that has 1:1 (no leverage) so that I can practice with a demo account and easily understand whats going on!! (Im not great at Maths).

I want to practice with $1000 with a 2% risk per trade. I have opened up a demo with Oanda but much to my horror have discovered that their minimum leverage is 10:1. This has ‘thrown me’ …as Im not sure how to calculate ‘‘the units’’ with 10:1 leverage!!!

Does a broker with no leverage exist here in the US? If not what’s the easiest way to calculate a 2% risk per trade ‘in units’ (with 10:1 leverage) ? ((20/60 = 0.03 in micro lots))

Sorry to sound ignorant!!! I’m really not :18:

I would be most appreciative if someone could help…:20:

Tania

2

You seem to be thinking that an account setting of 10:1 has anything to do with the actual leverage you use beyond potentially limiting it. If you want to trade 1:1 leverage then trade position sizes equal to your account balance. That’s 1:1 leverage.

Calculating 2% risk has nothing to do with leverage. That’s just .02 x account balance.

3

Hi Rhodytrader, thanks for your reply.
Im still somewhat confused about what to enter in to the ‘units’ box!! So maybe its easier than I think - so starting with $1000 capital, 1000 units is what i should enter in to practice 1:1 (even though the min leverage is 10:1?)?
Thanks!:21: Tania

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Hello, Tania

I’m not John Forman (rhodytrader). But, I think I can clear this up for you.

If you select broker leverage of 10:1, [I]you are not selecting a minimum —[/I]

— you are selecting the [I]maximum allowable leverage[/I] for your account.

In other words, you can trade any size position you choose, [I]up to the 10:1 maximum.[/I]

Oanda allows you to trade any number of individual units. So, in your $1,000 Oanda account, you can trade 1 unit, 2 units, etc. … up to $10,000 worth of base currency.

Your Oanda account, with 10:1 maximum allowed leverage, is perfect for the kind of trading you want to do — trading positions which are worth $1,000.

So, go for it!

.

5

If you want to trade at 1:1 leverage then you enter in the number of units which represents the value of the size of your account. I worded that very carefully because it depends on what you’re trading.

If you’re trading a pair which has the USD as the base currency (e.g. USD/JPY) then 1000 units is $1000.

If you’re trading a pair where the USD is the quote currency (e.g. EUR/USD) then in order to figure out how many units is equal to $1000 you divide $1000 by the exchange rate. For example, if EUR/USD is 1.2 then it would be 833 units (1000/1.2).

If you’re trading a cross rate then units is $1000 divided by the exchange rate of the base currency to the USD. For example, if you’re trading EUR/GBP then it would be the same calculation as for EUR/USD above.

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Hi Clint!
I see, very well explained, I understand now so it’s infact a max. leverage and 1:1 would be 1000 units and 3:1 3000 units etc. up to 10k.
So can you just answer this one for me… - if I want to enter 2% of my capital ((using an average stop loss of 60 pips)) how many units wd I enter in…??

Thanks!! Tania

7

ok thank you for your great explanation - I understand that part well now . 1:1 is very clear.

However I Am still eager to know what 2% of my capital (which is £1000) would be in Units, for eg. with a 60 pip stop loss?? What would I enter so as not to trade more that 2% each time.

Thanking you in advance!
Best regards, Tania

8

Depends on the currency pair you’re trading, and potentially the exchange rate (see my answer above). Your broker probably has a pip calculator to help you figure things out.

9

Hi again, Tania

You can do it manually, using a little math. Or you can use a Position Size Calculator to do the math for you.

Personally, I believe it’s good to know how to do this manually, even if you take the easy route in the future and let the Calculator do it for you.

Some of these position size calculations are so easy, you can do them in your head. Some are more difficult. The difference, as rhody has pointed out, depends on [B]whether your account currency matches the quote-currency (cross-currency) of the pair you are trading.[/B]

Examples: Your account currency is USD. Your account currency matches the quote-currency in EUR/USD, GBP/USD, AUD/USD, etc. But, it does not match the quote-currency in USD/CAD, USD/JPY, EUR/GBP, GBP/JPY, etc.

Let’s do a position-size calculation by hand, and let’s start with an easy one.

Let’s say you want to trade [B]EUR/USD[/B] in your $1,000 account, with 2% risk, and a 60-pip SL.

How large a position can you trade?

We know that your account currency matches the quote-currency in this pair, so we also know —

1 pip is worth $10 in a standard lot (100,000 units of BASE currency)

1 pip is worth $1 in a mini-lot (10,000 units of BASE currency)

1 pip is worth $0.10 in a micro-lot (1,000 units of BASE currency)

1 pip is worth $0.01 in a nano-lot (100 units of BASE currency) and

1 pip is worth $0.0001 (that’s 1/100 of 1¢) PER UNIT of BASE currency

Oanda lets you trade in individual units, so we will use that last figure: 1 pip = $0.0001

If you get stopped out, your 60-pip loss will cost you $20 (that’s 2% of your balance). So, if 60 pips = $20 (in this trade), then how much is 1 pip (in this trade)? The answer is $20 / 60 = $0.33333… (that is, 33 and 1/3 cents).

If 1 pip in this trade is worth $0.33333…, and 1 pip is also worth $0.0001 per unit, then how many units are in this trade? The answer is $0.33333 / $0.0001 = [B]3,333 units[/B] (dropping the fraction of a unit).

So, you can trade 3,333 units of EUR/USD (or any other pair in which the USD is the quote-currency), with your $1,000 account, 2% risk, and 60-pip SL.

Let’s use the Position Size Calculator to check this result.

We pull up the Calculator, and enter the following inputs:

Account Currency: USD
Account Balance: 1000
Risk Percentage: 2
Stop-Loss in Pips: 60
Currency Pair: EUR/USD (from the drop-down menu)

Click on [I]Calculate,[/I] and we get these results (which match what we calculated manually):

Amount at Risk: 20 USD
Position Size: 3333 units
Standard Lots: 0
Mini Lots: 0
Micro Lots: 3

Clearly, the result you want is [B]3333 units[/B] (because you will be trading units, not micro-lots).

Here’s a homework assignment for you:

Use the Position Size Calculator to determine how many units of USD/JPY, EUR/AUD, and GBP/NZD you can trade, assuming $1,000 balance, 2% risk, and 60-pip SL, in each trade. Notice that the Calculator is going to ask you for the current price of the quote-currency in each case (because in each of these trades, the quote-currency does not match your account currency).

.

10

One final point, Tania.

It’s not possible to specify 1:1 leverage, 2% risk, and a 60-pip SL in the same trade.

You can go with 1:1 leverage, which means a position having a [I]notional value[/I] of exactly $1,000 worth of BASE currency - OR - you can go with 2% risk and a 60-pip SL. But, you can’t have all of that at the same time.

As you saw in my last post, a EUR/USD trade in a $1,000 account, with 2% risk and a 60-pip SL, implies a position-size of 3,333 units of EUR/USD. The [I]notional value[/I] of this position would be $3,677.30 (given the current price of 1.1033 for EUR/USD). Clearly, this position size is [I]not[/I] equal to your account balance, and [I]you are not trading with 1:1 leverage[/I] in this case. You should be able to see immediately that actual leverage used in this trade is 3.68:1 (rounded off).

Take note of the fact that 3.68:1 actual leverage is well within the 10:1 leverage limit associated with your account.

I don’t pay attention to the leverage I’m using, when I’m trading individual positions. I control my risk, and leverage takes care of itself. And I would encourage you to adopt this way of selecting your position sizes, as well.

In other words, use the 2% risk percentage [B](or less)[/B] that we have been discussing, use a stop-loss on every trade, and use the Position Size Calculator to determine your position size.

Then, don’t worry about whether your position size is larger than your account balance.

11

Between you and Clint, I am very happy to say that I have finally got it now!!! This is a big problem off my mind, thank you so much for you help. Very much appreciated.
Tania

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Dear Clint,

Thank you so much for your help!!! I am so happy to say that I understand completely now;;;I have printed your replies out and been through it with a fine touth comb. I understood up to the 0.333333 but I jst couldnt see how to calculate the units from it…so you jst divide it by 0.0001 and that’s it! So infact I am trading around 3:1 leverage as you said. I didnt realize that you dont actually have to pay attention to the leverage!!! What a relief! It’s so much easier than I thought… I was convinced that it was set at min of 10:1 leverage -
Have done my homework to…usd/jpy = amount at risk $20 =4139 Units
eur/aud = $20 = 2260 Units
gbp/nzd = $20 = 1391 Units
It’s all really clear now thanks to your extremely helpful explanations!!. I cant thank you enough - so happy to have this problem resolved so I can get going with my demo trading correctly . (I have been putting the wrong units in for 6 months now…)
Thanks Clint - great teacher!
Best regards, Tania (English in America)

13

Hello Tania.

I’m glad to know that things are becoming clearer for you.

However — I have questions about 2 of the calculations you did for a homework assignment.

Here’s what I get, using current prices —

we agree on this one

we disagree

we disagree

Were you using the same inputs
($1000 account balance, 2% risk, and 60-pip stop-loss)
for all 3 calculations?

.

14

I believe that if a broker offers leverage accounts, that you can set your “default” leverage to one within their range.

On a side note, I am curious, if you are a U.S. trader, why you use UK in your user name.