Hello im a new forex trader and after practicing on a demo account for about 6 months a have a decent strategy down to be successful. When i opened my account with FX choice, i only deposited 100 dollars just to start small and see how i could make it grow.
So my account started out good went from 100 to about 150 in a day but then i got greedy stupid and emotional and went down to about 40 dollars.
My question is why now that im at 40 dollars does it stop my trades automatically when im down on a trade? for example ill be down about -20 bucks and it will just stop the trade automatically even though i still have 20 in there. Also it wont let me even do 1 dollar a pip anymore. I figure its something about leverage can someone help me understand this part of forex and dealing with a broker please.
If i wasn’t clear about something let me know id like some help thanks.
Hello friend! You are not ready to trade live
You could, but you would surely keep losing money.
You barely have an understanding of leverage, margin, position sizing and overall risk management.
I suggest you get back to school.
I once told a friend that “opening a demo account and trying out things for a few months does not mean you have learnt to trade the FX market.” You still need to study and read up lots of stuff.
Answering your Question
That happens when you no longer have enough margin to support your open position, it called “margin call”.
Leverage also determines how much your broker holds back as margin for each open position.
$1 a pip is a mini lot. You want to trade a mini lot with a $40 account? Really!!!
You will get margin called after just few negative pips.
If your leverage is 1:50. To open a mini lot you’ll need about $200 as margin, greater than your account.
If your leverage is 1:100. You’ll need about a $100 as margin, which is greater than your account.
If your leverage is 1:200. You’ll need about $50 as margin, which is greater than your account.
You can only open that with a leverage greater than 1:200
Thanks for your response, that helps clear it up. So if i had 40 in my account for example, and i wanted to do 30 cents a pip i would need 30 dollars of margin?
Its the account i already have open that i started with 100, it went up to 150 then dropped down to About 40 its not blown, so im going to continue practicing my strategy with the remainder of this account. Thanks for your help.
It’s a decent leverage; just make sure you are following the money management & risk management rules! Never open any trade with more than 2% risk ratio.