Leverage question
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Thread: Leverage question

  1. #1
    Can someone please help me understand this?

    I've a mini account at 200:1
    When I have a maximum of 6 places open of.1 lot each, what leverage am I trading in?

  2. #2
    So 6 lots is $300. And when I've a 3,000 account, then so I am trading at 10:1, is that correct?

    Quote Originally Posted by ;
    The smartass response is that you're trading 200:1. I am guessing you didn't mean this as a trick question so I am assuming you want to know how much margin you've used.


    On a mini account at 100:1 you set aside $100. At 200:1 you're setting aside $50/contract x 6 miniature lots = $300. You can divide $300 from the account value to determine the true fractional margin you've used. For me, it usually comes out to around 7:1 - 10:1.

    By the way, welcome to nigeriaforextrading.

  3. #3
    Yes, there are different types of margin however I hope this is what you were asking. As a rule of thumb, 1 mini per $1000 is very responsible when it comes to standing sizing.

  4. #4
    Quote Originally Posted by ;
    So 6 miniature lots is $300. And when I have a 3,000 account, then so I'm trading at 10:1, is that right?
    There is no such thing as I am trading at 100:1 leverage, for instance. It is more like I am trading an account collection at 100:1 leverage with this many total lots

    Leverage is only the reverse of margin. Margin just dictates how many lots you can have open at one time.

    I guess the confusion is due to some people today say high leverage is crazy... but it really depends what you do with this. But they also might say that since most of high leverage brokers are not ECNs... and perhaps they enjoy ECNs (or Oanda which just offers low leverage accounts 50:1 or reduced )

    But another thing is that if you're trading lower leverage, you're more insulated from a astrophe since you will get a margin call sooner than if you had 400:1 leverage. So there are more money left in your account after the call.

    Margin may be calculated depending upon the currency pair's value (google will find you lots of examples), or just like FXCM style that's the same $ value for margin regardless of currency pair. Which way is dependent upon the broker.

    But you can be completely leveraged or over leveraged which is dangerous. Over leveraged means that you're trading with too large lot sizes to your style of trading.

  5. #5
    Quote Originally Posted by ;
    Can somebody please help me understand this?

    I have a mini account at 200:1
    If I have a max of 6 positions open of.1 lot each, what leverage am I trading in?
    Hi Mac, and welcome into the Factory.

    To get a comprehensive explanation of broker leverage, true leverage and margin requirements and how all three tie together, please read the cash management sticky here in the beginner's forum. There are 23 posts. Work your way through all of them and you will get a better knowledge of these subjects than a number of other traders.

    Here's the link for your convenience.

    https://www.nigeriaforextrading.com/...ervations.html

    Dial

  6. #6
    Quote Originally Posted by ;
    Can someone please help me understand this?

    I've a mini account at 200:1
    When I have a maximum of 6 places open of.1 lot each, what leverage am I trading in?
    The smartass answer is that you are trading 200:1. I am guessing you did not mean this as a trick question so I am assuming you wish to understand how much margin you have used.

    On a mini account in 100:1 you set aside $100. At 200:1 you are setting aside $50/contract x 6 mini lots = $300. You can divide $300 by your account value to determine the true fractional margin you have used. For me personally, it usually comes out to around 7:1 - 10:1.

    Incidentally, welcome to nigeriaforextrading.

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