2 things:
[B]1. Effective Leverage vs. Maximum Leverage:[/B] FXCM does not have a “fixed 200-to-1 leverage”. Rather, our minimum margin requirement (MMR) for opening a trade allows you a maximum leverage of approximately 200:1. For example, as you can see in the Simple Dealing Rates window of Trading Station (shown below), the MMR for GBP/USD is £5.00
Since the minimum trade size is 1k GBP/USD, that means you can control £1000.00 in the market and only have to set aside £5.00 as used margin (Usd Mr). That means each pound you set aside can control £200. So your maximum leverage is 200:1. That’s not to say you should use all the leverage available to you, because that would leave you with no usable margin (Usbl Mr) to withstand drawdowns.
(Usable margin is what’s left of your equity after subtracted the used margin that has to be set aside for open positions. So if you have £600 in equity and with one trade open for 1k GBP/USD, then your usable margin will £580 after setting aside that £20 used margin. If you lost that £580, then your usable margin would drop to zero and the system would automatically close out your trade to prevent further losses.)
Since it’s not wise to max out your leverage when trading, what’s important to consider is what effective leverage you want to use. For example, with £600 in equity and one trade open for 1k GBP/USD, your effective leverage is 1.667-to-1 (or £1000/£600). If you have 2k open, then your effective leverage would be 3.333-to-1 (or £2000/£600). Personally, I try never to exceed 10-to-1 leverage on my account, so with £600 in equity, I would never open more than 6k total. Otherwise, I might be risking too much relative to the size of my account.
[B]2. Equity vs. Balance:[/B] As I mentioned before, balance is really a look into the past. I don’t pay attention to that column in my accounts window at all. Much more important is the Equity column. That is the real money in your account. Based on what you’ve said, I would say that you’re up £64.00 (still fantastic!) not £102.39.
I guess I have to put my A game next month lol…
