Have found myself in dangerous waters, margin level % very low, got alot of trades open, tried closing a couple of small lot sizes profitable and loss but for some reason this has just increased the margin which reduced margin level % further. Any helpful suggestions would be welcome about best course of action, and how to get the % back up, thanks.
I am not sure do I fully understand what you are saying, but it seems like your losses are ganging up on you. I think you need to explain your situation better, so I or somebody else can help you.
Thanks for your reply Financial Saint. Yes, alot of losses sitting there open, some quite large losses and 0.4 lot sizes, drawdown large, am trying to figure out how to get myself out. Immediate concern is the low margin level %. Am trying to increase it, but when I closed one 0.10 lot for +$111 then one 0.10 lot for -$18 this just increased the margin by $200 which reduced the margin level %, which I didn’t understand. So not sure exactly what to do at this point. Am happy to share any other info you might need to assist. Any help greatly appreciated.
what are the positions you still have open lets take a look at them and see if they are likely to reverse any time soon
There are only two options. One is to put more money into the account. The other is to close positions. Without knowing the specifics, I can’t say why closing out the two positions in question didn’t help. Might have had to do with net exposures.
I have 26 AUDNZD sells from 1.2768 down to 1.1951, mostly 0.10 but some larger 0.40s at the bottom (largest losses at present), 15 EURCHF buys from 1.4803 to 1.5357 mostly 0.10s, 6 EURGBP sells from 0.8670 down to 0.8661 mostly 0.10s, EURJPY - 11 buys from 123.07 to 124.60 all 0.10s and 10 sells from 121,75 down to 119.88, lastly, USDJPY 4 buys from 90.11 to 90.62 and 2 sells around 88.85. Am in deep, need a strategy to exit, bal $86,240, equity $20,297, margin $12,257, free margin $7,961, margin level 165%. Can put another $5,000 in today, takes 24-48 hours though. Thanks for help.
Damn dude you really got yourself in a hole, I don’t usually trade AUD/NZD I just saw that 100 pip rise in the past hour I hope for your sake it reverses at yesterdays high 1.3022 its right up on it as i type this
yes, Reserve Bank in NZ left cash rate alone, nothing helpful there, but a couple of AUS announcements due in a couple hours.
It’s not what you want to hear but close all trades, and learn to trade profitably, don’t throw away another £5,000.
Trader63,
yup, you have certainly dug yourself a huge hole here.
Just for info, the reason that you find your margins are getting less when you close a trade is probably due to your broker’s hedging policy.
Many brokers require zero margin when you hedge a trade…consequently, when you “unhedge” the broker requires you to place the unbalanced margin on the table. I suspect that this is why your margin % level drops when you closed those trades.
There is no simple way out of your situation but purplepatchforex has a valid point. It is clear that whatever strategy you have been using has gone wrong and the time has come to man up and take your punishment by closing those trades…
The trades that are hurting you the most are those AUDNZD trades, so kill off the 0.4 lot ones first as that will release the most margin. The other trades are mostly hedged, so should not really threaten you too much.
Another thing you must watch is the swap you are going to pay on the AUDNZD trades as this is the silent thief that will drain your account over time. Kill off these trades and then assess where you want to go with the balance of the trades…
Indeed, appreciate honest responses, will take the action suggested and close some trades and try and rescue some $ out of this if possible rather than lose it all. Thanks.
You need to be really conscious of the exposures you’re creating trading a bunch of different pairs like that. You may think you’re diversifying, but you’re not. For example, you have a bunch of EUR/JPY longs and some USD/JPY longs. That means a whole lot of JPY short. You’ve also got a bunch of EUR long exposure (15 longs + 11 longs - 6 shorts = 20 longs).
Taking off AUD/NZD positions should reduce your margin requirement immediately because they are not being offset by any of the other positions. Reducing your EUR and JPY positions should also help lower your margin requirements.
Well put, what appears to be diversification in FOREX very often means increasing risk, I trade 1 thing on 1 pair and it serves me really well.
Txs for responses. Have ceased opening new positions. Closed out some EURCHF which helped considerably. KennyH was spot on - I started to close some small profitable trades that were hedged and each time the margin level % decreased as the margin now came on the table, have put some cash in which also helped, but strategy at this point is to wait for AUDNZD & EURCHF to move back off their extremes, if it takes months then so be it, these are unhedged, close some out and then close the hedged trades. If necessary close a AUDNZD or EURCHF to stay alive. Will also takes purplepatch advice and find a profitable system to trade, when I get out of this.
Trader63,
Good move, when in a hole, the first rule is to stop digging:)
Let me guess Robominer???
Anyway just a few more points that I wanted to make :-
You seem to be committed to waiting out the AUDNZD drop…I think it is coming but like you say, this is some months away probably when the Kiwi’s eventually raise their interest rates. There may still be some steam, left in the current bull run, so I would suggest that you carefully calculate how many more pips you can tolerate and then try reduce your exposure to increase your available pips. No point trying to hold out just to hit a margin call in a couple of months.
Also consider the scenario that the AUDNZD may not come down anytime soon…the AUD is red hot at the moment and I am glad I stopped betting against it. You need to think about the upside benefit vs the downside risk…there is no point holding on to these trades if the best to can hope for in the next 6 months is for a return to a level 200 pips below where it is today. As a wise man once said “The market can stay irrational far longer than I can stay liquid.”
Just watch the swap on those trades…depending on your broker and your total exposure, you are probably paying close to $1000 in swap each month(rough estimate based on 26 positions of 0.1).
The EURCHF not such a problem as you may well be collecting positive swap on this one.
The hedge trades are a problem that are never going to go away…you may as well deal with them now as this is also producing a net loss in swap. There is nothing more useless than a hedge trade IMHO and the only way out is to either close it totally, or to take a position on one side of the hedge, preferably by closing trades rather than opening new ones.