I began trading with a paper account on OANDA back in November. I started to keep a trade journal. I went through the BabyPips lessons on margin trading, and have a few questions.
Am I correct in saying that the only money actually in play while a trade is active is the margin actually being used, rather than the position size? For example, let’s say I have $1000 in my account. if I go long on GBP/USD for $500, the margin I’m using is $25 according to OANDA’s rate table for that particular pair. So the only portion of the $1000 that’s on the table is the $25, right? If this is the case, then should I be tracking my gains (or losses) against the margin I’m using rather than the size of my position?
Hi,
You’re example is quite confusing and doesnt make sense.
The babypips margin page is here. it’s probably worth reading again.
Your margin is an amount that your broker asks for and keeps back so you can open and fund your position if it goes wrong. For example you have £1000 and trade gbpusd. Your broker says 10% is kept as margin. So you can only trade with £900. You will not be able to open a position that risks more than £900. You do not use your margin. It is not part of the trade. Your account size is 1k but you trade with 900 in that example. Therefore you should be tracking your losses and gains per position. Dont track it against the margin… this doesnt even make sense but I’ve said it as you asked.
I see your point, and will adjust my statistics sheet accordingly.