Hi all, I want to open a standard account with $500, with 200:1 leverage this will give me an account balance of $100000. I want to trade xauusd, with my account trading 1 lot at a time, will there be enough money to prevent my account wiping out if the trade goes through a retracement?
Expected is a lot of different answers, but being a pretty new FX myself I wonder of the rationale of a 200:1 leverage. I’m sure this has been mulled over by the forum many times before, but if something doesn’t turn on in the back of your beginning trader mind that raises flags then maybe you should expect to learn the difficult road. More power either which way one decides.
hehe… No it won’t
it will give you an Account Balance of $500
I’ll put it this way to you
a few days ago i was speaking to a bloke who had $4000 approx (Account Balance)
HE WAS ALSO TRADING XAUUSD
he put a trade down of 1 standard lot
in a short period of time, he was down by around $1,000
Now… YOU HAVE ONLY $500 in your Account Balance hehe
What do you think ?
Mate, if you want to experience it and try it
Open a demo with leverage of 1:200 with Account Balance of $500 and TRY IT
see what happens
i would not recommend this live to begin with.
you seem new and fresh and likely to lose your money if you go live
2 Likes
here is another lesson for you
(Assuming you are with my broker… pepperstone)
when you use levearge, a NOMINAL MARGIN will be required to place the trade (it’s like a security deposit, if you will)
Now, i’ve calculated this in USD (assuming this is your local currency)
on your instrument, Leverage is 1:200 trading 1 standard lot
YOU HAVE $500 Account Balance
the required Margin is $675
you wouldn’t even open the trade, they wouldn’t allow it
but the point is… YOU THOUGHT THIS WAS GOING TO BE OK
now… Theoretically, if they let you put the trade down (which they wouldn’t) but theoretically
you would not only be wiped out INSTANTLY
you would OWE THEM $175
ok, now let’s say you pop it down to 0.1 Lots
here you go
so from your $500
Take away $70 (let’s say… just round it off)
You are left with $430 to trade with
now at 0.1 lots you are trading with $1 per pip (Pip Value)
now let’s say Gold Moves 100 pips (which is a VERY VERY REAL POSSIBLILITY )
you now only have $330
to trade with
you’ll have 2 choices
close the trade or let it ride
if you close the trade
you get the margin back and you’ll be left with $400
now, LET’S EXAMINE THIS FOR A SECOND
-
You might say, it’s ok, because you got out and didn’t let it ride…
ok… -
but consider this… You just wiped out 1/5th of your entire account
THIS MEANS you can only do this mistake another 4 times and YOU’RE DONE
Mate, You just took away 20% of your entire account hehe
SEE HOW THAT WORKS
Re think it
2 Likes
Thanks, im very new to trading and still learning, Im using Elwave with a data feed to predict my trading outcome. I want to take around $250 a day which I think is acceptable. Im unsure how to set up my MT4 account which varying amounts of leverage and how much to deposit.
Hi mate…
i know, i gathered as much
you can always tell a newbie (and i don’t say this to insult you, i say it TO TEACH YOU)
you can always tell a newbie at trading because they think they this sort of thing will be ok
Here , Look… AGAIN.
it’s not Acceptable. Nor is it safe. Nor will you achieve it
but it doesn’t matter what i say.
WHAT MATTERS is whether you blow up your account or not, because WHEN (Not IF) You do
YOU are the only one that will be there to see it
Elwave Won’t protect you
babypips won’t protect you
Nor will your broker
you will be fed the speech about how Trading is risky… etc etc
it’s your own decision… etc etc
you should consider… blah blah blah etc etc etc before trading.
HERE IS THE IMPORTANT QUESTION THOUGH
WHY ???
Why did you think that it is acceptable or safe to try and MAKE A PROFIT of $250 with a starting balance of $500 on 1:200 leverage
SHARE YOUR THOUGHTS mate
Seriously
As a newbie, YOU HAVE NO IDEA how valuable this will be for other newbies
so… go ahead
TELL ME YOUR LOGIC as to how you came to this conclusion.
let’s see if we can help you so you don’t blow up your account hehe 
Save up until you can make it 5k. Always set a stop-loss at a chart-based not loss-based price. Make sure your stop if hit will only take out a small % of your account capital, lot of people say 1-5% max.
Thanks, ive raed a little more into it on the website. Will open a practice account and save up 5k. Thanks all.
not true. if you deposit 500 your equity 500 not 100000
1 lot is well too big for you account size. Stick to 1-2% and use a trade calculator.
Newcomers will learn about many new topics from this post.
Yes, you are right! This thread will really set some of the new traders to a confused state. Great discussion!