Forex Account Help Newbie

[iza9090]

Hi everybody ... Firstly I am new here and wanted to introduce my self to the trading community - my name is isabelle and I have been studing forex full time for half a year.

Today I decided that I will deposit $4000 USD into OANDA and try it in real life. I am aware that this is a very small account however I have realistic expectations - my goal is to always have this account (not to blow it) I believe that if I am careful and disciplined it is not as risky. I want to take it slow and steady and learn as I go on.

For the experienced traders I would like to know;

How much would you risk on a $4000 account - I know it is 2% - but how do I figure out the UNIT amount?

Is a 25:1 leverage acceptable for this account?

What would I have to risk to get a margin call?

The questions are fairly basic but over the past 1/2 a year I traded on the demo account where I did not think much about units and what they meant - I focused on patterns/ trend following.

Thankyou for your time.

 

[Magos]

Hi everybody ... Firstly I am new here and wanted to introduce my self to the trading community - my name is isabelle and I have been studing forex full time for half a year.

Today I decided that I will deposit $4000 USD into OANDA and try it in real life. I am aware that this is a very small account however I have realistic expectations - my goal is to always have this account (not to blow it) I believe that if I am careful and disciplined it is not as risky. I want to take it slow and steady and learn as I go on.

For the experienced traders I would like to know;

How much would you risk on a $4000 account - I know it is 2% - but how do I figure out the UNIT amount?

Is a 25:1 leverage acceptable for this account?

What would I have to risk to get a margin call?

The questions are fairly basic but over the past 1/2 a year I traded on the demo account where I did not think much about units and what they meant - I focused on patterns/ trend following.

Thankyou for your time.

If you are going to trade long term is not bad but if you trade figures is another story.

1:100 leverage means you can open positions 100 times greater than your deposit

1:25 leverage means you can open positions 25 times greater than your deposit

For instance
1:100
You can trade a 4lot with a $4000 in USDCHF since you will need a $1000 for a 1lot
1:25
You can trade a 1lot with a $4000 in USDCHF since you will need a $1000 for a 0.25lot

The margin call on the other hand is usually around 20 -30%
And liquidation process will start usually at 20%

Example:
You buy/sell a 1lot USDCHF with leverage 1:25
Therefore with a 1:25 leverage your account will start going to liquidation liquidating the biggest position (since you only have one will close the one lot) if the losses go to $3200 ($4000 * 0.8) and your balance go to $800

Hope all the above helps

 

[Rhody Trader]

1:25 leverage means you can open positions 40 times greater than your deposit

This is pretty obviously incorrect. When trading 25:1 leverage you at trading 25x your deposit, not 40.

As for the initial questions:

How much would you risk on a $4000 account - I know it is 2% - but how do I figure out the UNIT amount?

If you're risking 2% on $4000, that's $80. To get units you need to also know how many pips you are risking on a given trade. Say that's 20, for example. You also need to know the pip value of the pair your trading for the minimum trade size. For a mini EUR/USD contract, for example, that's $1. So you now take that all together. You're risking $20 per mini contract (20 pips x $1/pip) so divide $80 by that and you get 4 mini contracts.

Don't get fixated on the leverage ratio, unless it's not letting you trade sufficiently large to let you take the type of risk you're after.

What would I have to risk to get a margin call?

Generally speaking, the margin call will come in - assuming your are using your full account for margin - when your account value falls below 50% of the initial margin requirement. Confirm that with your broker, though.

 

[iza9090]

Thankyou that really cleared it up Have a great day

 

[Magos]

This is pretty obviously incorrect. When trading 25:1 leverage you at trading 25x your deposit, not 40.

As for the initial questions:



If you're risking 2% on $4000, that's $80. To get units you need to also know how many pips you are risking on a given trade. Say that's 20, for example. You also need to know the pip value of the pair your trading for the minimum trade size. For a mini EUR/USD contract, for example, that's $1. So you now take that all together. You're risking $20 per mini contract (20 pips x $1/pip) so divide $80 by that and you get 4 mini contracts.

Don't get fixated on the leverage ratio, unless it's not letting you trade sufficiently large to let you take the type of risk you're after.


Generally speaking, the margin call will come in - assuming your are using your full account for margin - when your account value falls below 50% of the initial margin requirement. Confirm that with your broker, though.

okay got that typo wrong a bit lol

what i mean is that is going to b 1:25, so if you could trade 1lot with a 1 :100 you will be able to trade 1/4 that amount