Menu
Search
Sister Sites

Options

Search

Bookmark Thread

First Page First Unread Last Page Last Post

Printable Version

Similar Threads

Margin Levels and Margin Calls 19 replies

Margin/Free Margin/Equity 11 replies

I've figured out why so many people lose money in Forex 661 replies

difference between Usable Margin and Used Margin 9 replies

Understanding Margin and Margin Calls 0 replies

Attachments: How many dollars do I have to lose to experience a margin close-out
Exit Attachments

How many dollars do I have to lose to experience a margin close-out

  • Post #1
  • Quote
  • First Post: Edited at 8:02pm Mar 7, 2013 7:29pm | Edited at 8:02pm
Rook/Newb question here


Broker = Oanda

Bankroll = $100,000

Playing $10 per pip


How much $ do I have to lose until a margin close out occurs, and my trade is shut down?

I'm referring to a single trade execution. At how many dollars into the negative does it close you out? 50% of your bankroll?
It depend on the leverage and the currency pair ( pip value) that you are trading

Using EURUSD as an example as it fits your $10 per pip for 1 standard lot.

Assuming EURUSD is 1.3000
You are trading 1 Lot, which is 100,000 Euros
So 1 lot is 130,000 USD
If leverage is 100:1, you will need 130,000 divided by 100 for margin.
Ie 1,300 USD margin.
So if your account equity drops below $1,300, you can expect a margin call and can expect your broker to close either part or all of your position.

Margin requirements differ for different pairs.
Please Do Not PM Me With Coding Enquiries
  • Post #3
  • Quote
  • Edited at 10:51pm Mar 7, 2013 10:35pm | Edited at 10:51pm
Quoting Gumrai
It depend on the leverage and the currency pair ( pip value) that you are trading

Using EURUSD as an example as it fits your $10 per pip for 1 standard lot.

Assuming EURUSD is 1.3000
You are trading 1 Lot, which is 100,000 Euros
So 1 lot is 130,000 USD
If leverage is 100:1, you will need 130,000 divided by 100 for margin.
Ie 1,300 USD margin.
So if your account equity drops below $1,300, you can expect a margin call and can expect your broker to close either part or all of your position.

Margin requirements differ for different pairs....
Forgive my ignorance but for learning purposes can you please try to stick to my example.

The balance in my account is $100,000 Canadian dollars.

My trade equates to $10 CAD per pip which equals 1 standard lot. What your saying is in order for my equity to drop down to $1300 (1.3% of my bankroll) I would need to lose 9,870 pips @ $10/pip. That seems like waaay too much of a buffer until a margin call. Are you sure that's right? In summary, are you saying that all I need to do to not get margin closed is have the net asset value stay at least 2% of my bankroll or above?

Please explain what your talking about as it pertains to my above example where I have $100,000 CAD starting bankroll, and I execute a currency trade that when converted works out to $10/pip in Canadian dollars. Lets keep things simple. The example is assuming currencies have already been converted. How many dollars would I need to lose to receive a margin call? or what % of my bankroll would I need to lose to receive a margin call?

Thanks
I will forgive your ignorance, but you should also learn to be polite.
I suggest that you read your initial post again. You did not mention Canadian $, just $. Most people, I'm sure, will assume that you mean US$

If you are concentating on currency pairs that return 10 $CAD per pip, then you are restricted to pairs where CAD is the second currency.
Ie. USDCAD, GBPCAD, AUDCAD etc
Other pairs will have different pip values. A calculator can be found here http://www.babypips.com/tools/forex-...s/pipvalue.php

Margin requirements will also be different for different pairs depending on their values.
EG.
If you Buy GBPCAD, you are in effect borrowing enough $CAD to buy 100,000 GBP
If GBPCAD is currently 1.5000, then the total trade size is 1.500 x 100,000 = 150,000 $CAD
With leverage of 100:1 you will need 150,000 $CAD divided by 100 = 1,500 $CAD
All the while that you have equity of more than 1,500 $CAD in your account you will not experience a margin call.
If leverage is 10:1, you will need equity at least 15,000 $CAD

It doesn't matter what the start balance is in your account, only that the balance/equity is enough to exceed the margin requirement.

Margin requirement is different for different currency pairs and depends on leverage used.
If using MT4, the trade terminal will have at the bottom, the amount of margin currently required when you are in a trade.
Please Do Not PM Me With Coding Enquiries
Quoting Gumrai
I will forgive your ignorance, but you should also learn to be polite.
MT4/MT5 EAs/Indicators/Alerts coder
Quoting Gumrai
I will forgive your ignorance, but you should also learn to be polite.
I suggest that you read your initial post again. You did not mention Canadian $, just $. Most people, I'm sure, will assume that you mean US$

If you are concentating on currency pairs that return 10 $CAD per pip, then you are restricted to pairs where CAD is the second currency.
Ie. USDCAD, GBPCAD, AUDCAD etc
Other pairs will have different pip values. A calculator can be found here http://www.babypips.com/tools/forex-...s/pipvalue.php

Margin requirements...
Attached Image


Didn't mean to come across as impolite man, sorry. I'm a college student whose completely new to trading and I value and appreciate your insight.

I think the best way for us to be on the same page is for me to get you to simply interpret the above screen grab from my demo account. I'm scratching my head wondering why the hell the amount in the "Margin closeout value" is egregiously off the value that the actual margin call would be. It seems as though none of the fields in the account summary tell you how much funds you would need to lose or the specific balance in your account that would warrant a margin call. I'm almost embarrassed to ask this question because of how ultra-dumb and elementary it is, but could you please tell me which one out of the 11 fields in the attached image tells you the amount that will trigger a margin call.

Again, apologize about my obliviously bitchy attitude earlier.
Balance is the balance of your account, not incuding P or L from any open trades
Unrealised P and L is the total P or L from any open trades
NAV, normally called Equity is the balance including P or L from any open trades
Margin Alert is the required margin for all open trades
Margin used is the amount of your account being used as margin ( probably mostly the same as Margin Alert value)
Margin available is the amount of your equity that is available to be used for additional trades
Margin Closeout Value - If this value falls below the figure for Margin Alert, you will be issued a margin alert that will require you to close some trades or add additional funds to your account. Failure to do this will result in your broker closing some or all of your trades. No danger at the moment as you have so much free margin.
Position value is the position size of all open trades
Please Do Not PM Me With Coding Enquiries
So you would have to lose over $98,000 to trigger a margin call.
Please Do Not PM Me With Coding Enquiries
Quoting Gumrai
So you would have to lose over $98,000 to trigger a margin call.
With a MarginCloseOut% of 0.64 (about 640 CAD in our case), the margin call should be when the Margin Available goes below these 640 CAD ... So a loss over 98'000 CAD as stated Gumrai.
MT4/MT5 EAs/Indicators/Alerts coder
Nicely explained and yup, that's what a margin close out is all about and as others have pointed out, it differs by leverage and pair.
Quoting Gumrai
Balance is the balance of your account, not incuding P or L from any open trades
Unrealised P and L is the total P or L from any open trades
NAV, normally called Equity is the balance including P or L from any open trades
Margin Alert is the required margin for all open trades
Margin used is the amount of your account being used as margin ( probably mostly the same as Margin Alert value)
Margin available is the amount of your equity that is available to be used for additional trades
Margin Closeout Value - If this value falls below the figure...
Thanks Gumrai. That was a very clear explanation of margin call. The bit about the Margin closeout falling below the margin alert was very helpful.

Man, I've got so much to learn. What do you mean by position size of my open trades. How did Oanda arrive at the 25,764 figure?
Quoting fosho14
Man, I've got so much to learn. What do you mean by position size of my open trades. How did Oanda arrive at the 25,764 figure?
Position size differs depending on the pairs you are trading and the price of the pair at the time that you took the trade.
To explain how it is worked out, I would need to know what currency pair you are trading. It can get quite complicated.
I suspect that you have an open trade that doesn't have CAD as the 2nd currency.
There are various position size calculators available free online.
Please Do Not PM Me With Coding Enquiries
Okay, I'll end the questions here. Thanks for taking the time out of your day to help a novice Gumrai.
No worries
I would think that many traders have difficulty working out their position size, especially when their account currency is different to the currency that they are trading.
It would be nice if the broker's platform had a window with info for each instrument listing
Pip value in account currency
1 lot position size in account currency
Margin requirement per lot in account currency
Swap rates
Etc

It would make life much simpler.
Maybe some brokers have this facility?
Please Do Not PM Me With Coding Enquiries
with $100,000 in your account at $10 per pip basically means that you have one
standard lot open.
Upon opening the trade, and you experience a loss( $10 per pip), then to
receive a margin call, you have lose 100% of the account.
This means that you have to be 10,000 pip loss.
To lose 50% of the account then you have to lose 5000 pips
Take out the spread and you have the approximate loss.
Quoting Danny Maina
[size=2][font=Arial]with $100,000 in your account at $10 per pip basically mea[size=2]ns that you have [size=2]one
[size=2]standa[size=2]rd lot open.
[size=2]Upon opening the trade[size=2], [size=2]and you experience a loss( $10 per pip), then to
[size=2]receive a margin call, you ha[size=2]ve lose 100% of the account.
[size=2]This means that you have to be 10,0[size=2]00 pip loss[size=2].
[size=2]To [size=2]lose 50% of the account then y[size=2]ou have to [size=2]lose 5000 pips
[size=2][size=2]Take out the spread and you have the approximate...
Not true. It depends on the leverage available.
If leverage is 10:1, then margin required would be $10,000
If equity drops to $10,000, then you can expect a margin call.
If equity moves below $10,000, then you can expect your broker to close all or part of your position unless you add additional funds.
Please Do Not PM Me With Coding Enquiries
Quoting Gumrai
Not true. It depends on the leverage available.
If leverage is 10:1, then margin required would be $10,000
If equity drops to $10,000, then you can expect a margin call.
If equity moves below $10,000, then you can expect your broker to close all or part of your position unless you add additional funds.
well gumrai......i did not indicate the 1:100 leverage that i had in mind.
In that case the margin call will come after 99000 loss with 50000 being the 50% mark... right?
Quoting Gumrai
No worries
I would think that many traders have difficulty working out their position size, especially when their account currency is different to the currency that they are trading.
It would be nice if the broker's platform had a window with info for each instrument listing
Pip value in account currency
1 lot position size in account currency
Margin requirement per lot in account currency
Swap rates
Etc

It would make life much simpler.
Maybe some brokers have this facility?
Gumrai,
Trading Station has these features one broker I know that uses Trading Station is FXCM. it's one of the reasons I pay the 1 pip premium to as opposed to other brokers. The most valuable metric for me is Pip Cost as it tells me exactly what I'm risking per pip. I've struggled to find an Indicator in MT4 that provides Minimum Margin, Pip Cost, Roll Buy, Roll Sell, and the spread in an easy to read format. But I've been extremely happy with TradingStation.

Nic
  • Post #19
  • Quote
  • Last Post: Mar 12, 2013 4:33am Mar 12, 2013 4:33am
Quoting NicCOConnor
Gumrai,
Trading Station has these features one broker I know that uses Trading Station is FXCM. it's one of the reasons I pay the 1 pip premium to as opposed to other brokers. The most valuable metric for me is Pip Cost as it tells me exactly what I'm risking per pip. I've struggled to find an Indicator in MT4 that provides Minimum Margin, Pip Cost, Roll Buy, Roll Sell, and the spread in an easy to read format. But I've been extremely happy with TradingStation.

Nic
Good info Nic.

Personally, I like the MT4 platform. I have a UK account with GKFX Spread Trading and they don't use lot sizes as such. With them 1 lot on all instruments is 1 Pound per pip and they go to 0.1 lot which is 10 pence per pip. Makes it a lot easier to work out risk for each trade.
I don't worry too much about margins etc as I don't overtrade and never risk too much.
Please Do Not PM Me With Coding Enquiries
Thread Tools Search this Thread
Search this Thread:

Advanced Search

0 traders viewing now