If you trade 2000 units (2k) with 500€ in equity, then your effective leverage is 4:1. On this leverage, the exchange rate on a forex trade would have to move 25% against you (25% times 4:1 leverage = 100%) to take your account balance to zero. Therefore an exchange rate move of more than 25% could take your account negative. An example would be if you bought USD/JPY at 100.00 and it dropped 30% to 70.00.
The margin watch feature of our platform would automatically try to close your trade if your usable margin fell to zero to prevent your account from going negative. However, if this move happened too quickly over the weekend or during a news event, there is a risk your account balance could go negative before the closing trade could be automatically closed by the system.
Note that if your stop loss is triggered, it becomes a market order. That means it will get filled at the best available price in the market. This price could be worse than the price you requested. In fact, the latest stats show 39.9% of all stop orders received negative slippage on our platform, while 50.02% of limit orders received positive slippage. This is due to the momentum or price movement when such order types are triggered.
While US residents are required to trade through FXCM US, and UK residents are required to trade through FXCM UK, as a resident of Slovenia, you are free to trade through any of FXCM’s trading entities worldwide. If you would like to trade through FXCM UK, please use the FXCM UK account application.
Floating P/L measures the amount you are making or losing on open positions, since the time they were opened. By contrast, Day P/L measures the change in your Equity since the time the current trading session began. Each 24-hour trading session begins and ends at 5pm New York Time.
[QUOTE=lexys;778655]Hi Daniel - I’m still a full-time trader, but at the end of 2015 I actually switched from trading spot forex to trading futures, simply because I wanted to use constant-volume bars, which aren’t available with spot forex. I was (eventually) convinced by institutional and ex-institutional trader friends that the way I traded would prove more profitable with the same risk factors, if I switched to futures, and fortunately this turned out to be right.
So at the moment I [I]don’t[/I] actually trade spot forex (but I do trade almost exactly the same way as when I did, for all those years - just the way my charts are constructed has changed).
It s nice to hear that you made right choice and that you are doing well. I m still on the beginning but i m doing a lot of researching. Maybe someday i ll say for myself that i m doing well.
Leverage is one thing i realy need to understand. So i would be thankful if you can explain that step by step to me.
My understanding of forex trade is very limited as you can see.
As you said in example: trade 2000 units (2k) with 500€ in equity
1.When price go 25% against me that is 250 pips- 50€
2.margin is let we say 100€
3.If i close trade on that price (75.00) my equity will be 450€( When trade is closed margin goes back in equity???or im wrong)
So that is how i understand forex trade. You must be smiling now . So obviously 1 thing missing. In your example In that scenario my equiti will be 0 (zero,nada) in my 450€. Can you pls explain me where those 450 € goes…
It seems you are making some incorrect assumptions which is why you are confused.
A 25% move against you in price is not the same as losing 250 pips.
EUR/USD is currently trading around 1.1000[0]. If you bought EUR/USD at that price, then a 25% drop would be to 0.8250[0]. That’s a drop of 2750.0 pips. Such a drop is extremely rare and would typically take years if not decades to play out in a major currency pair.
I mentioned 25% simply to illustrate how big a drop would be needed on 4:1 leverage (controlling 2000 Euros or 2k EUR/USD with 500 Euros in your account) to take your account to zero. By contrast with 100:1 leverage, it would only take a 1% drop to take your account to zero. A 1% drop from 1.1000[0] is to 1.0890[0] which is only 110 pips. Such a move is not uncommon even over a single day. It should be no surprise then that profitable traders tend to use less than 10:1 effective leverage. With 500 Euros in your account, that means not trading more than 5k total at any given time.
I’m not sure what you mean by these statements. The minimum margin requirement (MMR) for each currency pair is specified in the Simple Dealing Rates window of your Trading Station. For EUR/USD the MMR for 1k is 2.50 Euros on an FXCM UK Mini account. So for 2k, it would be 5 Euros you would have to set aside as Used Margin (Usd Mr) to meet the minimum margin requirement.
The amount you make or lose on a trade depends on your trade size and the pip cost of the currency pair in question. The pip cost is displayed in the Simple Dealing Rates window and tells you how much you make or lose per pip on a 1k trade. Take that amount and multiply it by 2 if you have a 2k trade, to determine the amount you are risking per pip. On a 1k EUR/USD trade, you’re risking 10 cents a pip, so on 2k you’re risking 20 cent per pip. A 75 pip loss would equate to losing $7.50.
You might find this earlier discussion on leverage helpful helpful: 301 Moved Permanently
Thx for quick response. I made wrong calculation because of that i was realy confused. Now i understand. And i opened UK demo account and i see the differences. Margin is 10 times lower than on a previous account.
I’m glad I was able to help, and it’s good you’re on an FXCM UK demo now. That said, please note the research I referenced above with stats regarding the use of 10:1 leverage or less. Just because you have a car that can reach speeds of 200 kph doesn’t mean you should drive at that speed.
I trade with FXCM US which means all my live accounts have the higher 2% margin requirements you noticed in your previous FXCM US demo in compliance with CFTC regulations. That limits my maximum leverage to 50:1, but I personally limit my effective leverage to 10:1, so the higher margin requirements don’t bother me at all.
First thx again for your support.
I have some question for you as i seriously thinking to open account with FXCM in the future. My first deposit will be 500€.
How much is margin?
How much is widdest spread on currency pair?
Do you have any deposit or withdrawal limit (min;max)
Do you have any rules on trades:(stop/loss or take profit… can i put them only 1-5 pips away or do you have any limits)
Do you have any limits how long have to be trade opened before closing it down( can i close my trade after a 1 minute or do you have any limit)
Do you as a broker take trade with me or against me?
After deposit/withdrawal how long time does it take my account will be funded (skrill)?
If you have time i will be very happy to get answers. I apologize for any inconvenience.
I’m glad to help. As a resident of Slovenia looking to deposit 500€, you can open a Mini account with FXCM UK.
The default margin requirement for an FXCM UK Mini account is 0.5% or 5€ for each micro lot (1000 currency units) of EUR/USD you trade. That allows you to use up to 200:1 leverage, but it would be wise for you not to use up all the leverage available to you.
A recent DailyFX study on trader profitability showed that traders who use 10:1 leverage or less tend to do better than those who use more than 10:1 leverage. Limiting yourself to 10:1 leverage with 500€ in your account would equate to trading no more than 5 micro lots (5000 currency units or 5K) total across all your open positions.
Spreads are determined by market conditions. While there is theoretically no limit to how wide they could be, the high amount volume FXCM clients trade in the market gives us access to very competitive price quotes from multiple liquidity providers.
Our website has a table showing our typical Mini account spreads. Note these spreads are all-inclusive with no separate commissions charged. That’s why they are typically about a pip wider than our Standard account spreads which have a separate commission.
The risk of wide spreads is greatest during news events and around 5pm New York Time which marks the beginning and end of each 24-hour trading day. if you are concerned about wide spreads, consider avoiding these times.
The minimum to open a Mini account is $50. The minimum for a Standard account is 2k. The minimum for an Active Trader account is 25k. There is no deposit maximum.
When making a withdrawal, you can withdraw all the equity in your account if you have no open positions. If you have open positions, you must leave enough money in your account to meet the margin requirements for your trades.
There are no such restrictions on the No Dealing Desk (NDD) forex execution we provide to Standard and Active Trader accounts. Since Mini accounts use DD execution, there might be such restrictions depending on market conditions.
Again, there are no such restrictions with FXCM’s NDD execution. While there are no specific time limits on Mini account trades, they use DD execution, so price arbitrage strategies are prohibited.
FXCM determines, at its sole discretion, what encompasses a price arbitrage strategy. Mini accounts utilizing prohibited strategies or with equity surpassing 20k may be switched to NDD execution.
On the NDD execution we provide to all Standard and Active Trader accounts, FXCM offsets each client order one-for-one with the best prices from competing liquidity providers. That means we don’t take the market risk on the other side of your trades, if you have a Standard or Active Trader account.
On the DD execution we provide to Mini accounts, FXCM can act as the dealer on any or all currency pairs. Backup liquidity providers fill in when FXCM does not act as the dealer. That means we could take the market risk on the other side of your trades, if you have a Mini account.
One key difference between FXCM and other brokers with a DD execution option is that we also offer an NDD execution option. That means we can switch traders from DD to NDD if our risk management warrants it. Therefore, we don’t have to resort to the dealer intervention practices some traders worry about with dealing desk brokers such as requotes or excessive spread widening.
For verified Skrill accounts, deposits and withdrawals are typically processed within 1 business day.
. So obviously 1 thing missing. In your example In that scenario my equiti will be 0 (zero,nada) in my 450€. Can you pls explain me where those 450 € goes…