First off, let me say how much this site (the school + blogs) has helped me on my journey though the world of Forex! Thanks for the time and effort guys!
Okay, so I’ve read through the school as well as some other articles / sites but there’s still a few things I’m not 100% sure about.
Now I know it’s a double-edged sword and all that, but where is it’s disadvantage in this situation:
Suppose I have $10000
I buy 1000 units of EURUSD @ 1.000
Pip value = $1
@ 1:1 leverage, my margin used = $10000 = 0 pips “breathing room” before margin call.
@ 1:2 leverage, my margin used = $5000 = 5000 pips “breathing room” before margin call.
@1:10 leverage, my margin used = $1000 = 9000 pips “breathing room” before margin call.
@1:100 leverage, my margin used = $100 = 9900 pips “breathing room” before margin call.
@1:200 leverage, my margin used = $50 = 9950 pips “breathing room” before margin call.
And so on.
It seems that the higher my leverage, the more breathing room I have, so can withstand greater market fluctuations. Wait… after typing that and reading it over again, I see that if I do get margin called, I would lose more the higher my leverage… that must be the disadvantage…? Hmm… lol maybe I answered that question myself
Anyways, secondly, taxes.
So I’ve read that non-US citizens (which I am, I live in New Zealand and have never been to the US) don’t have to pay the same taxes on gains through the forex as US citizens. When I (hopefully) start trading live, I intend to use USD as my deposit. Does that change anything? Also, do I have to pay taxes to the New Zealand government? If so, does anyone know how much? And what if I make losses?
Any help greatly appreciated