A newbie here.
If I am trading $100000 at a 100:1 leverage then my margin would be $1000. That is I am depositing an amount of $1000 to trade with a standard lot. My profit or loss will be calculated for that lot. Will I be trading with money borrowed from the broker? How will I repay him? If I am not repaying then how does the broker profit from leverage trading?
If I am not borrowing money from the broker then how can I account for the $100000 that I trade while my investment is only $1000?
Please help me here… Thank you…
Margin is only $1000 as long as price does not go down ! - If trade goes against you with $1000 deposit, you will be handed your arris on a plate !
If broker as dealing desk hence if you losing money will become profit broker, now some broker offer high leverage until 1; 2000 or higher more to attract many new trader, if trade with higher leverage hence will increasing opportunity because need smallest margin requirement, but using maximum lot size on high leverage will narrowed margin level and might will quickly facing margin call
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Okay, I have around $5000 in my account… What then? Those $5000 dollars still dont accoun to the $100000 that I am trading… How does this work exactly?
Hi @Chinmay_Kalmane,
With forex (and futures), when you trade on margin, you put up a fraction of the value for the currency position you take, but your forex broker (or futures commission merchant) does not lend you any money. (This is in contrast to trading on margin with stocks, where you put up a fraction of the value for the shares you purchase, and your stock broker lends you the remaining amount of money needed to buy the stock.) That’s because the margin you put up in forex (and futures) acts as a good faith deposit.
If your broker says your maximum available leverage with them is 100:1 that means your minimum margin requirement is 1% (because your margin is inversely proportional to your leverage). Assuming an exchange rate of 1.2400[0] for EUR/USD, that’s $1240 required margin to open a standard lot (100K) position in EUR/USD, since 100,000 euros would be equivalent to 124,000 US dollars at that exchange rate.
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FACT: anytime you trade with leverage you ARE borrowing money from your broker!
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and in case it isnt obvious, using leverage on trades you dont have a very high conviction on is a recipe for disaster.
and as far as I know there still is no forex brokers in the world who gaurantee STOP LOSSES.
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It’s not a “fact”. It isn’t true. It’s wrong.
Find the posts of Rhodytrader, Clint, Laughingcharlie, Lexys and others, if you don’t want to trust me for it. They’ve all explained it countless times, here.
Then you haven’t looked very far. Even Google would help you with that one. Or this forum. Or any other trading forum.
As I’ve been explaining in a couple of other threads, over the last few days, THIS is the kind of thing that really puts me off posting here.
The fourm’s full of deeply erroneous statements, often stated with some force and emphasis, as if they’re factual, when actually they’re just WRONG.
The beginners using this forum (at whom it’s aimed and for whom it exists) don’t know any better, and can easily believe all this stuff, if it isn’t corrected.
They can look at the totally mistaken statements made so emphatically as “FACTS” like the ones just above, and at accurate and helpful observations and advice posted by people like Charlie, with his experience of decades in various aspects of the industry, and they don’t know the difference between the two, so they can’t tell whom to believe.
And why should they?
It’s a problem, and it’s a shame.
Other trading forums seem not to have this problem.
Maybe mostly because they’re far better attended and busier, and there are much larger number of more experienced members ready to shout down all the misinformation when it occasionally appears? I don’t know.
Sorry to complain, again, but it’s a real problem here.
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you are EFFECTIVELY borrowing money, no matter what you imagine, using more than 1:1 leverage, means you are trading with your brokers money, and can result in a stop out, to PREVENT you from losing their money.
SO weather or not you are actually borrowing money from your broker, it is exactly the same thing as it relates to trading, forget the technicalities and understand the fundamentals.
as long as you continue to trade high leverage accounts with tight stop losses, you will lose until the end of time, forex is rigged, just like the casino is rigged, advantage house/bank/casino
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why are you misleading them about LEVERAGE then? leverage is the # enemy of the retail trader, newbie or not.
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ok technically and exactly the broker doesnt have to “loan” you “money” but dont consider for a moment that they are not extending you credit, as they in fact by law are required to cover your trades meaning to the counterparty of the trade they are on the hook for the whole amount that they may have not technically loaned you, they are STILL responsible to the counterparty for every cent of the trade, so if you use leverage, specifically BIG leverage, your broker is on the hook for the full value of the money, so even if its not “technically” a “loan” it has the economic EFFECT 100% of a loan, as your broker has to gaurantee that money you have in those leveraged trades as if they were THEIR trades, meaning they are 100% financially responsible for ALL their traders leveraged losses. SO no loan, but you can LOSE their MONEY and their MONEY is on the line 100%. dont be confused about the reality of the situation no matter what you “label:” things.
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I’m close to speechless at this totally mistaken and factually incorrect “account” of an industry I’ve known for decades.
No offence to anyone, but for the benefit of less experienced members, and especially beginners, reading this: take NO notice of anything in the post above. It’s all totally wrong. It’s purely fictional. It misses the point by a mile. It bears no resemblance at all to the industry I’ve worked in and around for longer than I can remember. And it bears no resemblance at all to the one anyone else has worked in, either!
As Lukas said above, if you want to know how this really works, find the posts of experienced members like Rhodytrader, Clint and Lexys on this subject. On no account be guided in any way by the post quoted above!! 
Agreed - it’s like something out of a nightmare. Just weird! 
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Thanks, Charlie.
This thread and three others here, today, have made me realise that I really don’t want to spend any more time here at the moment.
It’s too futile, and too irritating for me. Maybe that’s just a reflection on me, rather than the forum, but either way, at the moment it feels like there are better places for me to spend my spare online time.
Probably I’ll look in again in a few months and see if things look better or worse, overall. I suggest you might want to do the same thing? Let’s be honest: neither of us will be missed at all.
For now, farewell and good luck.
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Certainly not a reflection on you bro.
The evil racist robot elders have no time or need to cultivate relationships with us, the existing membership. We do not contribute income. Sad isn’t it? Babypips grew up and became commercialized.
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Yet we are still here bumping threads for them 
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“Jesus said, helathy people don’t need a doctor. . .sick people do.” :>) I don’t think you’re bumping threads for anyone other than a desire to help new traders the way traders helped you when you started. Anyone who has been around for a while knows that there is very little black and white to do with forex, most of it is grey and it’s nothing new for posters to be giving bad or wrong advice to those that don’t know any better. It’s the job of those who know to post the proper information. What the new trader has to learn to be able to do is tell the difference the same way you had to.
When experienced traders leave the forum or don’t correct- incorrect posts the only people you help are those that are trying to use inexperience to their benefit, A lot of people on all forums post their opinions as facts and it takes time and help from the experienced ones to show them there is a different between opinions and facts.
Just an observation, now I’ll go back to reading my bible :>)
Gp
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So, If the broker does not lend me any money then how will he open a standard lot position for me if I only deposit 1% of the amount for a 100:1 leverage. Who accounts for the $100K being traded in the market.?
Thank you.
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Please dont mistake me sir, but I am a newbie and cant tell the difference between right and wrong information posted here.
Please do guide me and help me. If you think the posts here are wrong then do guide me to the right information. being a newbie all i can do is to look up to experienced traders like you and many others to guide me. Always looking for your advices.
Thank you.
I am not able to find the links to the posts of the traders that you mentioned in your posts. Can you send me the links. Would help me a lot since I cant find them here on this forum?
Thank you
I agree with you sir. Just looking for some help here but I am sad to see people fighting over my second thread/post in this forum. No offense to anyone though.