Can you trade forex like you would a stock? I.e. going all in, or would you get a margin call?

Beginner Questions
1

I was wondering if it was possible to trade forex like you would invest with stocks? So instead of putting 1-2% per trade, you put 100% of your account in each trade (though this would be a very small fraction of your investments) with a very large stop loss.

An example using the babypips position size calculator:
Account currency: AUD
Balance: $1,000
Risk: 100%
Stop loss: 280 pips
Pair: AUDUSD
Current price: 0.71805
Position Size (units) 25,644.6429
Standard Lots 0.2564

My question is would you get a margin call when the stop loss is hit or well before? The essence of the question is, would you have enough margin to be alive until the stop loss is hit … that’s basically what I want to know.

I realize this is unconventional but it’s just a different risk management system as you’d only put in your account what you’re preparted to lose, I’d just like to know if it’s theoretically possible.

Edit: just to clarify, the 100% trade size is because you would be holding a position for weeks/months on end.

2

First off what leverage would you be using ? To open 25.000 units it would cost you 26.000 AUD with no leverage.
If you used 1:50 leverage it would cost you 512 AUD which you would not be able to open if you get margin call at 50%.
If you used 1:500 leverage it would cost you 51.2 AUD to open and you get margin call at 50% leaving you roughly 500 AUD left to try again…
You always get Margin call . !!!

So yes you could do it similar to what your suggesting but you will get margin call at 50% but margin stop out could be 20% so you get a call at 50 and stopped out at 20 but not all brokers are same…

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3

Thanks, I’m using ICMarkets with 1:500 leverage. Margin autostop out in mt4 is apparently 50%.

Does that mean I would get stopped out if it moved 140 pips against me (50% of the 280 pip stop loss)? Sorry, I’m a bit confused.

4

Also at 3.47 AUD per pip the 3.47 x 280 = 277.6 AUD so if you took 1:500 leverage your stop would be hit before margin call.

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5

My stop would be hit before the margin call! That’s awesome and exactly what I wanted to know, thank you!

I see how you got 51.2 now (found the ICMarkets calculator).

6

Ok but just to note that if you looked at the contract specification of AudUsd or any pair there is a margin maintenance % so if it says 100% then you would need at least 51.2 left in account to open it now if it says 200% you would need 102.4 left in your account to be able to open it. !

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7

I’m still a bit confused but from what I can gather by using the babypips position size calculator with 100% as the trading size … you’re going to hit your stop loss before you get an auto margin call at 50% … is that a reasonable statement?

8

Sorry the calculation was wrong 3.47 x 280 = 971.6 so you would get stopped out before your stop loss

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9

Are you sure? I just talked chatted with someone at ICMarkets and she said what you did previously, that I would hit my stop loss before I got a margin call.

She gave the calculation: Margin Level = (Available Equity / Required Margin) x 100

10

Ah, I’m understanding it a bit better now. So basically you get the margin call when you hit 950 (or 948.8 technically if the margin is 51.2).

11

If you have $1000 Aud and open 25.000 units it cost you 52.1 and you get 3.47 per pip so if it went down 280 pips that’s $971.6 so if margin stop out is 50% of your 1000 you get auto closed at about $500 that’s before your stop loss

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12

Could another way of saying this be: just double the stop loss in the position size calculator (as you will get the margin call at 50% of that stop loss)?

13

No there is Margin call which tells you your so many % down on your account then you get Margin stop out which closes your trades

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14

If you had you stop loss at half of the 280 pips away at say 140 pips away then 3.47 x 140 = $485 so then it would hit your stop loss before that 50% margin call and leave you with about $515 left in you account

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15

Thanks for taking the time to educate a stranger on the internet. Perhaps the only way to do it then is to do a 50% position size rather than 100%, so that you always have that 50% in your account and so will never get the margin call?

16

I have to call it a night but much appreciated, thank you again. It’s a steep learning curve.

17

You don’t have to change position size just stop loss but you could just let the margin stop out close you trade and use that as a stop loss.

18

can i ask you to not move to the forex , there is a lot opportunity in stocks
you can make a lot of money trading the movers

19

Yes, it’s a great tool to use! By the way mate, I’m curious to know the story of using this kind of user name! It’s interesting (your user name)! If you don’t mind, please…….

20

Yes, that’s what I was looking for. You helped me understand a lot. Basically one needs to halve one’s stop loss or position size for that calculator to work on 100% position size per trade (because you get a margin call at 50%). Makes perfect sense now.

I did try halving my stop but if you’re holding the position for weeks/months on end, how do you combat this sort of thing?

ICMarkets-MT5 - Hedge - [AUDUSD,H4]
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