[quote=“Shariku, post:1, topic:109131, full:true”]
I’ve been curious about FX trading for three months now, so i’ve been learning on the side and running a demo account on Investopedia for the last month. I tried to set it up how i would expect to do it in real life, so i put it as $1000 and got started demo trading
… The demo was Investopedia’s $1000 Trading Challenge (no end) and leverage is set as 100:1.
… I look at brokers online and i see that they have leverage of around 200-800:1. Is my leverage being that low leading to an unrealistic result?[/quote]
You are confusing
Your platform limits your overall leverage (leverage on all your open trades combined) to 100 times your account balance. That’s what 100:1 leverage means.
Initially, you were actually using 30 times your account balance, when you traded 3 positions of 10,000 units each in your $1,000 demo account. As your balance grew, and you continued to trade the same number of positions and the same position sizes, you were actually using less leverage in each group of trades.
Here’s how that’s figured. For simplicity, let’s assume that all of your trades had the USD as the base currency. In other words, you were trading pairs of the form USD/XXX, where XXX can represent any currency other than USD. Given this assumption, each of your trades had a notional amount of 10,000 units and a notional value of $10,000. Initially, each $10,000 position was 10 times the size of your $1,000 balance. And 3 positions open at the same time represented an exposure of 30 times your (initial) balance.
That is, initially you were actually using 30:1 leverage.
The leverage you were actually using would have been 30:1, regardless of how much maximum leverage your platform allowed you. So, whether your platform limited your leverage to 100:1, or 200:1, or 1000:1, your trades would have worked exactly the same way.
[quote=“Shariku, post:3, topic:109131, full:true”]
I can’t see anything on Investopedia’s site within easy viewing that says who they’re simulating.[/quote]
Here’s a comparison of Friday’s closing prices (bid and ask) for the 10 pairs offered on your Investopedia demo account, with the same pairs (marked with red arrows) on a live Forex.com account:
[U]From the Investopedia demo platform[/U]
[U]From the Forex.com platform[/U]
As you can see, the prices are identical. This means that either (1) Investopedia is getting their price feed from Forex.com, or (2) both are getting their price feeds from the same source.
Bottom line: The prices in your Investopedia demo account appear to reflect the real market.
[quote=“Shariku, post:5, topic:109131, full:true”]
Some of the trades did go sour, but when that happened i reasoned that if i simply bought the same/doubled quantity of the same trade again i could just wait until the market fluctuated back up and then i could at the very least break even and negate the loss. It worked out whenever that happened.[/quote]
Your position sizes (10,000 units) represent (nominally) $10,000 trades, with each pip of profit or loss being worth $1. So, your $10 take-profit point in each trade corresponds to a 10-pip profit in that trade.
You haven’t mentioned using a stop-loss. You have only mentioned doubling-up on your losers, in order to erase losses. Eventually, this strategy is likely to destroy your account.
I knew a guy once who had this fail-safe strategy: He opened every trade with a 10-pip TP and a 100-pip SL, and just let it run until either the TP or the SL was hit. He claimed that natural market fluctuations would always cause the TP to be hit first.
It worked beautifully. Until it stopped working. He blew his account.
Your strategy sounds a little like that.