Hello, guys! I don’t understand how margins and other stuff are calculated and I’ve a question.
At my broker, you’ve these leverage 1:1000 for account under 1000$ and 1:500 for account between 1000-20000. They say the stop-out is at 40%.
I’m interested to delay the stop-out, when you’re trades are closed because it goes againts you (on negative).
I don’t know what that means, but when I’m on negative, at one moment, the trades and all other details about my account are red and if it continues go futher, the trades are closed. I thought that red means I’m close to be stop-out.
What I don’t understand is that I’ve two demos accounts, each with 100$ and a leverage by 1:1000 an account and the other with 1:500. At 1:1000 account, the red came when I was -40$ and on the 1:500 red came when I was -20$. So I thought the stop-out was early on 1:500 than 1:1000?
I’m right? Can you explain me? I’m interested to delay the stop-out.
You are pretty new. I think it would be better for you if you first go through the School of Pipsology of Babypips. Finish all the lessons from there. Yes continue the demo it will help you to understand how trading mechanism works. But for being a successful trader every should invest his time for learning before he invest in the market. Hope you get it.
Think of leverage as a loan. Without leverage, anyone with less than 123,000 usd would not be able to exchange EUR/USD! So what was offered was “LEVERAGE” which increases the buying power of your account. What is buying power? Well say you want to wager 20usd per pip on EURUSD but you only have 5,000 usd. Without leverage, as aforementioned, you wouldn’t be able to place the wager. So you accept a loan, Leverage, of 100:1 Well,do you see that ratio of 100 : 1 ? The : = multiplication and the 1 is the money you have in your account! 100 times 5,000 = total buying power with no open orders! That gives you the ability to wager in the market. Just note that i explained that way for one to understand. Leverage given by brokers can be explained in another way as well.
Now, the thing about going in “red”. Going in “red” is a term used by traders when their trade eats up their remaining balance! That could be for 1 cent or 10 billion dollars. Red = losing/loss. You also have a moment in which your account, in MT4 turns RED! That isn’t because you are losing money, but because you are nearing the “STOP OUT LEVEL”.
The stop out level is the automatic limit the broker places on your account in which all open orders must be closed. As your “free margin” goes beyond negative, it will reach a point of negative 40% and that is what we call margin call! That is a call every single one of us has had for being ignorant to how this market works!
Great answer but man these guys have a great tool here, the ability to learn, but they rather just be fed the damm answer 