I’m using 10:1 leverage on my demo account (the lowest they offer) and placed a buy order for 3 micro lots (~1% of my $1000 account) last night on USD/CAD at 1.31754 with a stop loss at 1.31323 (43 pips) and a take profit at 1.32620 (87 pips). After placing the order, my margin was $300 and my free margin was $700. Assuming I’m thinking about this correctly, that means I could only place an order for 7 more micro lots at a similar price/risk level for a total of ~3.3% total risk. If that’s true, how is it possible for people to blow up their account? I know funky stuff can happen with price blowing past a stop, but I think that’s rare. Unless I’m missing something (which I probably am :-)), I’d have to do the max margin ~30 times and lose every time in order to blow up your account. Also, How is it that I’m only able to place 3 trades of this size/risk? How can I have more active trades? What am I missing?
most people learning blow an account (or very nearly) at some point because unlike you, they don’t have the sense to use 1:10 leverage
commonly they use something like 1:200 (some are even insane enough to try 1:500!) thinking to themselves that it must be a reasonable thing to do because “most people” do it
of course, that’s why most people lose
given the overall success rates among people starting out with forex trading, it pays to AVOID doing what “most people do”
when you see things being commonly accepted in a beginners’ trading forum, and looking like things that most people do, never assume that they’re sensible, unless you want the common and normal result (losses) - easy logic, really?
You thinking is right, but people blow their accounts by placing too large an order with too large a margin, With mini lots, someone could easily place 5 mini lots, on $500 account on a margin of 200:1 or more. That would be a margin of £250, with $5 per pip, 50 pip move against then, they’re margin called, and half their account gone.
If you add more micro lots, then you have less than $700 in free margin. The larger the lot size, the more margin necessary to take the trade. Use a margin and pip calculator before taking trades.