I have opened a trade on a 50,000 demo account. It says I only have 4,365 free margin left. I only risked 3% of the account. How is this possible. Now I cannot place another trade as it says “no free money”
I do not know the leverage amount. Using FXCM spreadbetting UK account.
Your position (bet) is 9 standard lots of GBP/CHF. That’s a £900,000 position.
You are using actual leverage of 18:1. Did you intend to put on such a large position?
Check your numbers. I’ll bet that you will find that you are risking way more than 3%.
The margin on the GBP/CHF pair is 5%. Five percent of £900,000 is £45,000.
This means that £45,000 of your £50,000 demo account is unavailable for covering spreads or losses.
Evidently, the spread and/or loss in your position (bet) totals £634.37
£50,000 - £45,000 margin - £634.37 spread and/or loss = £4,365.63 free margin.
Free margin is the portion of your account currently available to cover any additional losses.
Hi Epidot,
Clint is absolutely correct. Your £900,000 has used up almost all of the margin in your account. That’s 18:1 leverage. As a general rule of thumb, try not to exceed 10:1 leverage across all your open trades. This article has more info on why.
With £50,000 in your account, you could control up to £500,000 in open trades and stay within 10:1 leverage. However, you might want to spread that risk across multiple trades to diversify. For example, you could open 5 trades of 100k each, or 10 trades of 50k each.