Hi
If I trade with a $1000 using a leverage of 100:1 , this would allow me to trade with a position of $100,000
Now lest say I lose all the capital in a really bad trade will I then owe money to the broker…?
Hello again. Good to see you’re asking questions and eager to learn.
In most cases you won’t find a broker that will allow you to go into the negative. They will liquidate your position (margin call) as soon as the equity in your account runs out.
The problem with using 100:1 leverage like that is you will only have an effective 10 pip stop before you’re margin called.
However let’s say over the weekend, price opens with a gap beyond the point of margin call. Your trade will be closed immediately on market open and depending on the broker’s policies you may indeed owe them money.
Thanks again!
Play around with this calculator. Everybody I send to it, seems to like it. Nice and simple and gives you a whole picture