Thanks a lot for the explanations.I understand it better now.but it has given rise to some other questions:
since my broker doesnt make use of position size,will i be making use of it any way when I want to trade or it’s only useful for those whose trading platform includes that?
2)for the demo account I am practising with the volume size i can trade with are 0.01,0.02,0.03,0.04,0.05,1.00,2.00…,8.00
Does this mean this is the contract value u referred to when u said
0.01 lot (for example) is equal to 10cents per pip?
3)if I have $200 as capital, will it be advisable to trade a micro lot so as risk lesser or can i trade a mini lot?
4)if d leverage is 100:1,margin required is 1%.if the leverage is 50:1, margin required is 2%. What will be the margin required if the leverage is 10:1? I tried getting the value by doing cross multiplication but I didn’t get it right.
from the lessons in babypips,it was advised that newbies should trade with lower leverages,say 20:1 or preferably 10:1.if using a a leverage as low as that,won’t that mean that the trader is trading with more of his own money in each trade?
So i want to risk only $2 in a trade for a mini lot size,since my broker makes use of volume and not position size,will I enter the volume as 2 or 0.1?
when you are trading in MT-4 you will be using LOT SIZES
if you are trading on your brokers online platform , then maybe not
No… CONTRACT VALUE is how much money is in the trade
CONTRACT SIZE is the LOT SIZE
also. you can enter the amount manually , you don’t need to pick one from the list
Example, you can enter 0.08 if you like
but yes
0.01 = 10 cents per pip
0.05 = 50 cents
and so on
Personally i would advise AGAINST trading with $200 to begin with
because
let’s say you use the min lot size of 0.01 10 cents per pip
let’s say you put down a stop loss of 40 pips so risking $4
but 1% of the total NOT COUNTING THE NOMINAL MARGIN is $2 risk
so, You’re already in a bad position
now to stay within the risk NOT COUNTING THE MARGIN
you would need to have a stop loss at 20 pips, which is pretty pointless in some cases
now LET’S ACCOUNT FOR MARGIN
so let’s say your NOMINAL MARGIN IS $50, which is really being forgiving
so now you really only have $150 to trade with, and 1% is $1.50
so now your down to a stop loss of 15 pips
my advice do not start with less than $1500
$1k minimum
Margin doesn’t work like that
sometimes it does and sometimes it doesn’t
you need to go to your broker and ask how the margin is worked out for a specific instrument
that’s probably why you’re getting it wrong.
hehe
it was advised that newbies should trade with lower leverage huh
OK… well
Let’s look at both sides of the coin shall we
babypips has a legal responsibity to not say to people… GO OUT AND GET THE LARGEST MARGIN POSSIBLE
thats why they said what they said, it’s a legal thing
now. TO A POINT IT’S TRUE
the point they were trying to convey TO NEWBIES is… Forex has high risk and Leverage amplifies that risk… THAT’S VERY TRUE
and yes the Lower your leverage, the More of your own money you are using
example 1:1 is not a leverage, here YOU USE ALL OF YOUR OWN MONEY
1:2 is the lowest leverage
it means you put in half and the broker puts in half
so let’s put numbers to this
if you are in a trade that is $10,000 Units of currency
you put in $5k as Nominal Margin on a 1:2 Leverage account
but, DO YOU HAVE $5000
No… so its a higher risk from that point if you did have it
so if you have say $1,000 in your account and your leverage is 1:1 you can only control $1000 worth of currency, but they won’t let you trade that small.
now look at 1:100 Leverage same trade $10,000 Units of currency
you would need to put in $100 as NOMINAL MARGIN
and yet YOU STILL GET TO CONTROL $10,000 Units of currency
Meaning, you get to trade a larger lot size so you can earn more money
meaning… if you put in $100 from your $1,000 in your account
you have $900 as free balance
now if you are risking 1% of your account , you can risk $9
and if you have a stop loss at 30 pips you are using 30 cents per pip
so YOU TRADE A LOT SIZE OF 0.03 LOTS… REMEMBER THAT… ok
now same trade
but… 1:500 leverage
same account balance
this time you only need to put in $20
Meaning you have $980 to trade with
meaning… NOW… WATCH HOW THE LOT SIZE IS DIFFERENT
same stop loss… 30 pips
same risk 1% x 980 = $9.80
now watch how the lot size changes
as opposed to 0.03 lots (meaning you make 30 cents per pip) if you win
the lot size is 33 cents per pip meaning 0.033
NOW. YOU CAN’T PLACE A TRADE OF 0.033
but THIS PROVES A POINT ANYWAY
USING HIGHER LEVERAGE MEANS…
You control more currency, which means you can trade a larger lot size, which means MORE MONEY PER PIP
Now it also means LOWER NOMINAL MARGIN PER TRADE
now this is all good and fair UNTIL YOU UNDERSTAND THAT… IT ONLY WORKS IF YOU KNOW HOW TO MANAGE YOUR MONEY AND YOUR RISK
because if you don’t, YOU’LL BLOW OUT YOUR ACCOUNT AND LOSE EVERYTHING
but Assuming you do do it correctly
YOU CONTROL MORE CURRENCY WITH A LARGER LEVERAGE ON YOUR ACCOUNT
try it on demo
open 2 demo’s
1 with leverage of 1:10
second one with leverage of 1:500 or higher
open both accounts with $1,000
you’ll notice at times on the 1:10 you won’t be able to place a trade of a certain lot size
but YOU’LL BE ABLE TO PLACE IT ON THE OTHER ONE
this is the point
you get to control more currency and make more money than you normally would be able to do
THAT’S WHAT THE PURPOSE OF LEVERAGE IS
Is there more advantage trading in mt4 platform to trading on my broker’s platform?
But if say i use mt4 platform and I want to make a deposit or withdrawal,what will the process be like? How will my broker help me do such transactions if i use mt4 platform because I thought if i trade on my broker’s platform direct,I won’t have issues with such transactions
If it’s volume my broker deals with and not position size,does it mean that if my balance is $200 and I key in 1.00 as the volume,does it mean it’s only $1 that I will use for the trade or how is volume calculated with respect to the contract value?
I didn’t really get the calculation of how the lot size ur 0.03. A micro lot
0.01=10cents per pip.
I keyed in these values on the position size calculator and I got this:
hehe
Yes there is an advantage to trading off MT-4 IT’S EASIER and more user friendly
Your broker doesn’t help you make transactions , YOU DO THAT
Deposits and withrawing are done through your online client area or whatever they call it
you do that stuff via the online interface
you trade off MT-4 or C-Trader whichever you prefer
HELL NO
1.00 Lot size = $10 PER PIP
Not $1 in the whole trade
Mate
$1,00
and
1.00
ARE NOT THE SAME THING
it’s like saying
$1.00
and
1.00 Kg
ARE NOT THE SAME THING
$1.00 (THIS IS A MEASURE OF CURRENCY)
1.00 LOTS (THIS IS A MEASURE OF LOT SIZE)
1.00 (1 STANDARD LOT) Means you are consuming or making $10 per pip
so… if the trade runs against you by 50 pips YOU WILL MAKE $500
IF IT GOES THE WRONG WAY… YOU LOSE $500
Not $1[quote=“Lexzykool317, post:14, topic:129608”]
if you put in $100 from your $1,000 in your account
you have $900 as free balance
now if you are risking 1% of your account , you can risk $9
and if you have a stop loss at 30 pips you are using 30 cents per pip
so YOU TRADE A LOT SIZE OF 0.03 LOTS… REMEMBER THAT… ok
I didn’t really get the calculation of how the lot size ur 0.03. A micro lot
0.01=10cents per pip.
I keyed in these values on the position size calculator and I got this:
[/quote]
ok
well let’s do it STEP BY STEP
did you understand this…
if not tell me
Now. did you understand this… that you are risking 1% of what is remaining
because 1% x 900 = 9
if not … tell me
Now. UNDERSTAND $9 IS THE TOTAL AMOUNT YOU HAVE TO PLAY WITH IN THAT TRADE
so…
it’s like this
$9 divided by 30 pips = 0.30 Meaning 30 cents Per pip
NOw, you convert that to lots and it’s 0.03 lots
because 0.01 lots = 10cents per pip
so 0.01 x 3 = 0.03 Lots or 30 cents per pip
[quote=“Lexzykool317, post:14, topic:129608”]
I keyed in these values on the position size calculator and I got this:
LOL
BECAUSE YOUR BROKER IS NOT TAKING INTO ACCOUNT THE MARGIN
LOOK…
THIS IS WHAT YOUR BROKER IS DOING
You entered
ACCOUNT CURRENCY = USD
ACCOUNT BALANCE = $900
RISK PERCENTAGE = 1%
STOP LOSS (PIPS) AS CHOSEN BY YOU = 30 PIPS
CURRENCY PAIR = EUR USD
so your broker does a stupid little calculation like this
risk percentage x Account Balance = Amount at Risk
so…
0.01 (1% ) x 900 = $9 USD
Now if you trade this, You are going to realize when you open a trade that THIS IS NOT TRUE
because they have not factored in NOMINAL MARGIN into the calculation
the way i do it is
Account Balance - Nomainal Margin = What you are really left with
then
Risk Percentage x What you are really left with = Amount at risk
see the difference
THEN WHEN YOU LOSE and you ask your broker
and FEEL FREE TO GO ON CHAT AND ASK THE BROKER WHY THEY HAVE NOT CALCULATED NOMINAL MARGIN
because a trade is not just made up of Risk Percentage
there is a Nominal Margin involved as well
so ASK THEM "WHY DOES THE CALCULATOR NOT FACTOR IN NOMINAL MARGIN"
see what they say
and you’ll find that you’ll get some BS excuse as to why it’s your responsibility to know this
and YOU’LL FIND YOU’LL GET THAT EXCUSE AFTER YOU LOSE YOUR MONEY.
No…
1% is not a Margin
Nomainal Margin is Measured in $$$
Can you explain how it’s easier and more user friendly please?
If you don’t have to make transactions through a broker,what is their role in forex trade? I thought some of the things to consider when choosing a broker is a broker that charges less on commission,pip spread etc. I thought of you trade on the platform of a broker that charges less,you will make more profit and pay less for charges.
If i do the trade off MT4 direct, how will the payment for charges attached to trades be charged and paid for?
Also, the plaform I have is the platform from a broker(alpari mt4).I downlaoded mt4 platform yesterday that is not attached to any broker but it was very similar to the alpari mt4 platform.I still saw these same features :
My main concern is the volume feature. I thought I will see position size but I did not.
Can you give me the link I can use to download the General mt4 platform that makes use of position size please?
You didn’t really get me.What shows in the VOLUME option on my mt4 platform is 1.00 and when I use my mobile mt4 app to check it, it shows as $1.00. I didn’t say $1,00.
So from these, if volume is what is used to trade and not position size,how do i determine my position size and does it mean it’s $1.00 I used for the trade (based on the use of volume to trade?)
You didn’t really get me.What shows in the VOLUME option on my mt4 platform is 1.00 and when I use my mobile mt4 app to check it, it shows as $1.00. I didn’t say $1,00.
So from these, if volume is what is used to trade and not position size,how do i determine my position size and does it mean it’s $1.00 I used for the trade (based on the use of volume to trade?)
I understood the calculation of how it is $9 I can risk.thanks
I understood how you got all these values in your calculation but when I calculated
$9 divided by 30 is 0.3 and not 0.30
Are they the same or did you use 0.30 because 1 decimal place can’t be used for the calculation?
Ok.but on the platform I use, when I log in and I don’t have any open trade,the only values that show are: balance,equity and free (or usable) margin.nominal margin doesn’t show.so how will i know what my nominal margin is?since my platform doesn’t make use of position size but volume?
From your own point of view you advice that someone should open an account when he has at least up to $1000 to be able to trade for large not sizes and use less of one’s money with a higher leverage
But If say someone doesn’t have up to that or someone doesn’t want to risk that much,can’t I say use $200 for example and open a micro account and limit my trade to a micro lot and use leverage to trade for the micro lot position ofn $1000,and not aim to trade for large positons like the standard lot of $100,000 which would be risking too much which such small amount?
Yes, of course you can, and in principle that would be a very sensible and good approach.
But there are two other things you need to know:-
The purpose of trading with a $200 account isn’t to make money: it’s to gain experience. (Even if and when you get as far as joining the very tiny minority of forex traders who can make a steady 5% per month on their accounts, that’s still only going to be $10 per month, so it’s not exactly a money-making opportunity!)
Depending on your trading style, $200 may not even really be enough to trade a micro-lot safely. (If you were trading EUR/USD with a 20-pip stop-loss, it would just about be ok, because your risk per trade would be 1% of your capital, but if trading with wider stop-losses than 20 pips, your risk would exceed that and $200 wouldn’t be quite enough.)
Let’s pick a few brokers out of a hat so to speak… ok
now you are with ALPARI…
NO MATE… THEY ARE NOT SMIILAR , they are IDENTICAL
you see
Alpari MT-4
Pepperstone MT-4
Oanda MT-4
are exactly the same as MT-4 (Raw)
the only difference is the RAW version from MT-4 comes unconfigured
the brokers then take it… they configure it and YOU DOWNLOAD IT from their website CONFIGURED
so you don’t have to do anything further
IT’S THE SAME PROGRAM MATE… ok[quote=“Lexzykool317, post:17, topic:129608”]
Can you explain how it’s easier and more user friendly please?
[/quote]
Sure…
well. firstly THIS IS MY OPINION of course
but a lot of people seem to agree
MT-4 is easy to use, Easy to place trades, its nice, it’s basic and it’s quick and not heavy on computer resources.
drawing lines and attaching indicators and experts is easy
backing up is easy
adding new indies and experts is easy
it’s easy all around
now your 2 choices will be MT-4 and C-Trader
Just like with a computer you are either a Windows Person or a Mac Person
well in trading you are either an MT-4 Person or a C-Trader person
now in computing we have Linux people
and in trading we also have Webtrader people, but the webtraders and mobile phone traders are not the majority
the majority are C-Trader and MT-4
Pick one
i think we need to be CLEAR ON THE WORD “TRANSACTION”
Now, by definition it means (Loosely) ANY TRANSACTION Any Exchange of good and services for cash
BUT. you have used it in the context of WITHDRAWING MONEY (which is also a transaction) but… i assumed you were saying
can you withdraw funds directly from the MT-4 Platform… NO YOU CAN’T
you need to go to your broker online and do it in the client area
what is the purpose of the broker
THEIR PURPOSE IS TO FACILITATE YOUR TRADE
their purpose is not really to provide a platform, but THEY DO IT ANYWAY
so i suppose
UNDERSTAND THAT the broker is there to mediate the trade on your behalf and take a commission
you can do all that within MT-4
you cannot withdraw or fund your account from MT-4 directly
NO…
if a broker charges commission and has a fixed spread of 3 pips for example
whether you trade on MT-4 or directly from the web interface THE FEES AND SPREADS ARE THE SAME
MT-4 IS MERELY AN INTERFACE PROGRAM
it’s like this ok
you have email with let’s say Telstra (Bigpond) or whoever your carrier is
and YOU USE A PROGRAM CALLED OUTLOOK
Now… Outlook is NOT YOUR EMAIL
Your email is held on the server of your provider
Your trades are held and executed on the server of your broker
Outlook merely is a program that talks to the ISP server to get your email
MT-4 is merely a program that talks to your brokers server and says “hey … put this trade down now… ok”
and the server does it
if you put a trade down to buy EUR USD and your computer shuts down
the trade is still running on the server regardless
however, if the server dies but your computer and MT-4 platform still work, Your trade is gone (in theory)
get it
Nothing will change
THE CHARGES ARE IDENTICAL
MT-4 IS GIVEN TO YOU FREE OF CHARGE
if a broker ever charges you for MT-4
Say Good by and give them the middle finger… simple as that
hehe
in MT-4 you use LOT SIZES
this is how the program is programmed up, you can’t change it
and there is no MT-4 program that will be different
they are all the same
are you sure you are using THE ORIGINAL MOBILE MT-4 App
because there are a lot of copycats
i have Mobile MT-4 Mine says LOTS so 1.00 not $1.00
you must have a different app
what do you think 0.3 Means ???
Mate, if we standardize it to CENTS
so instead of
$9 divided by 30
we say
900cents divided by 30 = 30cents right
so
0.30 is = to 30 cents
and obviously
0.3
and 0.30
and 0.300
and 0.300000000000000000000000000000
ARE EXACTLY THE SAME aside from how many decimal places you want to go to
but with money we use 2 decimal place
but it is understood that 0.3 cannot be 3 cents
Your calculator will round off 0.30 to 0.3 because it knows IT DOESN’T MATTER.
does that make sense
well that’s right
because when you have no trades on, YOU ARE NOT USING ANY PORTION OF NOMINAL MARGIN
hence it won’t show you the Nominal margin
THIS IS THE POINT…
YOU NEED TO WORK IT OUT BEFORE YOU PLACE THE TRADE
LOOK,
do me a favour ok
ask your broker how to work out Nominal Margin or research it for yourself
I’ve given you a lot of material here
do me a favour and do some homework and find this out
and if you can’t i’ll help you
but, remember I WORKED THIS OUT ON MY OWN
so… why should you not ?
Nomainal margin is a combination of
Account Leverage
Local Currency
Current Exchange Rate
Your instrument
Your Lot Size
i think that’s it
Ok I now understand all your explanations so far.if you say mt4 is in lot sizes where does it show when you want to enter the value for the lot size?can you attach an image please?
This is what shows in the mobile mt4 platform when for instance I close a trade:
This is what shows when for instance I key in the volume as 1.00 and close the trade.it says I placed the trade at #1.00
From all what you have said so far,if I calculate the nominal margin and position using the example we used before where the amount I can risk is $9 and the lot size is 0.03,where will I indicate this amount and the position size when I click the icon ’ New Order’ when I want to place a new order?
it is in Lot sizes
it shows it here
1.00 (in blue writing) is the lot size you used for this trade
so this trade was
EUR USD
you were BUYING
You bought at 1.22150
and you started trading with 1.00 standard Lot ($10 per pip)
now we can see by this…
that
You’re NOMINAL MARGIN for the trade is $244.30
so if you traded at a lot size of 0.10 Lots… it’s reasonable to assume that the NOMINAL MARGIN would APPROX… be $24.43 OR THERE ABOUTS, it depends on exchange rate as well.
Now… You’re margin level WITH THIS NOMINAL MARGIN AND LOT SIZE was 1876.32% THAT’S GOOD
as a general rule, KEEP IT ABOVE 1,000%
if it goes to 100% You are in trouble
if it goes to 80% you’ll get a margin call
if it goes to 20% YOUR’E DONE, Account is blown up
Now…
Mate… see this icon in the top right corner
this is the icon to ADD A NEW TRADE
when you press this it will take you to another screen
on one side you will have the option to enter a Stop Loss amount
on the other side you will have a take profit amount
i think TAKE PROFIT is on the right
and STOP LOSS is on the left
now. IN THE MIDDLE of those 2 things you get to choose YOUR LOT SIZE
since you just did a trade for 1.00 lots
go back into this button
and LOOK AROUND for where it says 1.00
now,JUST FOR EXPERIMENTATION
CHANGE 1.00 to 0.05
AND PLACE THE TRADE
then come back to the trade screen and see what happens
yes, its a demo account. ok. so if 1.00 is for standard lot, 0.10 for micro etc, does it mean the other values are values for lots in between? i a value like 0.05 will be for what lot?
hehe glad to hear it.
