Basic beginner questions.

[Vatslav]

Hello all!
First of all thank you so much for this great forum, and especially the school section! The school is amazing and I am learning a lot every day. (Currently in 8’Th grade)

But I need to understand some things about margin and money management, before I can go on learning. Let me get straight to the point..

I am currently using Oanda demo account and pretending that it's a 100% real thing.

Lets say I open a micro account with 1.000$, with a 10:1 margin rate.
My maximum risk per trade: 1% of 1.000$ = 10$
1 pip = 0.10$
Maximum pip loss per trade: 10$ / 0.10 = 100 pips
(Am I right so far?)

Ok, let’s say I want to go long on EUR/USD at a rate of 1.3474
I buy 1.000 units of EUR and the market window is "telling" me that my "Margin used" is 134,74$ and "Margin available" is 889,50$

That's where I get lost.....What does the 134,74$ mean? That I can lose maximum 134,74$ if everything goes wrong?

I hope you can understand my question, and thanks in advance for the answer

[rhodytrader]

The margin used you see is the amount of money required to keep your position open as protection (for both you and Oanda) against potential loss. If the balance of your account falls below that amount, your position will be closed automatically (known as a margin call).

Note: Not all brokers will automatically exit open positions on a margin call.

[Vatslav]

Thanks Rhodytrader.
So just to confirm, if I have 1.000$ in my account and my used margin is 134,74, means that if I lose 865,26$ I get a margin call, right?

[certicex]

Originally Posted by Vatslav

Thanks Rhodytrader.
So just to confirm, if I have 1.000$ in my account and my used margin is 134,74, means that if I lose 865,26$ I get a margin call, right?

hi Vatslav
yes thats right and 134,74$ will be your new account balance
that means the lower leverage you use the higher amount of used margin will be taken to protect your open trade from total loss.

have a good one and keep it up

[Vatslav]

Thank you very much guys, now I clearly understand it