confused with my account size and actual P&L

[stucash]

Hi, guys, I have just started demo trading with a SB broker. the figures shown in my account actually confused me. since I just started, i have a lot to learn, so please bear with me.

I put a bet at 1 pound per point on Bank of American at the price of 8.220, stop loss at 8.055; deposit for this position was 41.10 pound (5% margin). My original account value was 10,003.

Account summary was like this:
Cash: 9961.90
margin: 41.10
loss:11.00
Account value: 9992.00

here comes the question.

firstly, what does this account summary mean?

Secondly, If i lost all my deposit, 41.10 pound, how much would I actually lose in my account? would it be 41.10, or 41.10 plus the loss I made on the trade?

finally comes with my genuine thanks for all your help! thanks a lot!

 

[G.O.A.T]

cash value is the amount that is still available for you to trade with, this will go up and down with your open position profit/loss.

margin,that's your deposit for open positions.

profit/loss is your floating profit/loss on your open positions.

account value is the total amout including profit/loss of your account.
the figures you've shown don't quite add up though.

On your BofA trade the most you SHOULD lose with your stop at 05 is £17 HOWEVER If you were to hold overnight/weekend and the market gaps against you and opens at 7.00 you will lose £122 wiping out your deposit and missing your stop.
the sb company will request a deposit according to the volatility of the market that you are trading and this will increase on markets which are more likely to gap or are more volatile etc.

Hopefully this makes sense?!

 

[tomorton]

Don't think of margin as a deposit that might have to be forfeited - it's a security or insurance, the margin amount is not at risk as such. The loss is the net loss, the gain is the net gain, the margin goes back into the account, it never left it.

 

[stucash]

cash value is the amount that is still available for you to trade with, this will go up and down with your open position profit/loss.

margin,that's your deposit for open positions.

profit/loss is your floating profit/loss on your open positions.

account value is the total amout including profit/loss of your account.
the figures you've shown don't quite add up though.

On your BofA trade the most you SHOULD lose with your stop at 05 is £17 HOWEVER If you were to hold overnight/weekend and the market gaps against you and opens at 7.00 you will lose £122 wiping out your deposit and missing your stop.
the sb company will request a deposit according to the volatility of the market that you are trading and this will increase on markets which are more likely to gap or are more volatile etc.

Hopefully this makes sense?!

Hi G.O.A.T, thanks for your exhaustive explanation and I do actually start to understand all these stuff now. But as you mentioned the figures don't quite add up, would you explain a bit more on this? I am a bit curious about this as a newbie.

Thanks very much indeed!

 

[stucash]

Don't think of margin as a deposit that might have to be forfeited - it's a security or insurance, the margin amount is not at risk as such. The loss is the net loss, the gain is the net gain, the margin goes back into the account, it never left it.

Hmm....make real sense to me, few words though. So basically I lose the money that is shown in the net loss, I win the money shown in the net profit, margin is still in my account as a insurance unless I do lose all the margin money. is this right?

Thanks in advance!

 

[tomorton]

Yes that's it. You will find you need to maintain a margin between the amount you have in your account and the amount that your account is worth plus or minus the current trade. If you let the margin get too small, because your current unrealised loss plus the margin would be worth more than the account, the SB firm will either just close half the position without asking you, or phone to ask you to put more cash into the account. Either is a bad sign - showing you have allowed your loss to exceed normal amount - most cautions people take the max loss per trade you should allow to be 2% of the account before you opened the position.

 

[G.O.A.T]

Hi G.O.A.T, thanks for your exhaustive explanation and I do actually start to understand all these stuff now. But as you mentioned the figures don't quite add up, would you explain a bit more on this? I am a bit curious about this as a newbie.

Thanks very much indeed!

Ignore me I was talking out of my backside, for some reason I thought the cash balance should include the open loss of £11 but this doesn't appear to be the case.