I’m practicing on the Oanda practice account and have questions relating to some of the values that are calculated on the order form. When I eventually go live I will certainly not be starting with 100K. I want to get a handle on how big my order in terms of units will be for a given trade.
The trade window has a value for Trade Value and Margin Used. How does the Balance and Margin available impact the number of units I am able to purchase?
For example, if I fund my account with $10K and Oanda provides another $10K in margin, how many EUR/USD units could I purchase given a quote of 1.500?
Thanks for helping out a newb!
i will try to help you please bare with me you open account with $100 let give the above pair $30 value for every 1000 units so you can only buy 3000 units and have 10 available for trading now let say your trade went against you and you are now down $15 that means you owe Oanda $5. What happens next it at 4pm esa time Oanda would send you an email telling you to please fund your account or they will close your position if you would do nothing they will close your open trades or you could close 1000 units and add $25 to your account (30-5 that you owe) now the account would show that you have 2000 units and $25 available to trade with. I hope this help you understand how it works.
How big a trade you can enter, and conversely how much margin you need to post for a position, depends on where you set your permissible leverage limit at, as Oanda allows you some choice there. Let’s say you go with the maximum, which is 50:1. That means you can trade a position with a value up to 50x the value of your available margin cash. If you have a $1000 account, that would mean $50,000. If EUR/USD is at 1.5000, then that would be about 33,333 units ($50k/1.5). Flipping that around, if you enter into a position with a value of $50,000 you will be required to have $1000 available for margin ($50k/50).
Do not think about margin like you would with stocks, though. It’s not a question of you putting up $X and Oanda putting up $Y. You are the only one putting up anything. You don’t borrow money from Oanda to buy something because you aren’t ever actually buying anything.
darthnihlus,
Adding to what has been said already.
Here is an online calculator that can answer your questions:
Currency Pair Units Calculator | OANDA fxTrade
On the sidebar there are links to other calculators that you might find useful.