Dec 2, 2015

Its been a while since my last post, I pretty much gave up trading but I'm drawn back into it and want to be successful at it.

I had some coaching from trade room plus and learned quite a bit, its odd how we try to over complicate something when in reality if your trigger is break of support / resistance its quite a simple process getting your head around cutting a losing trade is my biggest struggle, knowing when to cut it.

I'm pleased to say that some days I feel like I've cracked it, I'm not hooked into jumping in and out of trades, I wait, I look for confluence and I go with the trend or I halve the stake for reversal's, I allow my winning trades to run on with a stop loss protecting the profit and my account is growing, slowly!

Anyway I wanted to ask a question about margins which I probably should know the answer to but I don't know in enough detail (I've never had to)

So take the Wall Street for example and lets say its trading at 26,000, ETX require a margin of 0.50% so if I wanted to trade at £1 a point I need a margin of £130 simple, lets say I had just £135 in my account and Wall Street drops 1%, could my £135 be wiped out and put me into negative equity (-£125 in this example) or would ETX close the trade when the balance hit £0?

Now scale that up to £5 a point (no stop) and we have £800 in the account

Margin required £650
Wall street drops 1% 260 points £1300
Would my account be -£650 or simply close when the balance hit £0

Numbers get scary unless you manage your trades

I presumed the trade would be closed, I'm pretty sure City Index did that to me in my earlier days but I'm not entirely sure hence the question.

I use stop losses and ensure my risk is less than my proposed reward but this is something I keep meaning to ask, I maybe better asking ETX but you never know