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Smallest Forex Margin Available?

  • #1
  • First Post: Edited 11:19pm Mar 10, 2008 11:16pm | Edited 11:19pm
I am primarily interested in Forex NOT to earn massive amounts of pips, but rather to spread out my cash holdings over several currencies & higher interest rates than what I'm currently getting. I'm more concerned about wealth preservation than wealth building (in other words... VERY low risk... holding... not investing).

SO... I'm looking for a Forex service that allows very low leverage (1:2 or 1:3 preferably). I've looked at OandA and FCXM, but it seems the lowest leverage they allow is 1:10 and 1:100 respectively.

I'll be funding my account with $100k.

Any recommendations who offers low leverage like this?

EDIT: I realized after I hit "submit" that my title says "Smallest Forex Margin" when it should be "Smallest Forex Leverage." My bad. Sorry for any confusion on that.
  • #2
  • Mar 11, 2008 12:40am Mar 11, 2008 12:40am
My advice.
MoneyMarket account with a bank.
You can hold different currencies.
1:1 leverage.

If you don't want to "trade" currency, why stick it in a broker account?
Carpe Divitiae
  • #3
  • Mar 11, 2008 1:54am Mar 11, 2008 1:54am
Quoting fsiltd
If you don't want to "trade" currency, why stick it in a broker account?
Because I like the option of trading currency if I want to. And also (perhaps more importantly), I do want to use a little leverage. With 1:2 or 1:3, I can boost my interest earnings without risking very much.

Interest on the USD is abysmal (and going down). Interest on AUD & NZD is very high, and probably won't lose too much.

Australia's economy is booming with China's resource demands. I'm expecting AUD/USD parity (or very close anyway) in 2008.

Please... where is the flaw in my logic?
  • #4
  • Mar 11, 2008 2:23am Mar 11, 2008 2:23am
I thought Oanda offered buying in increments as little as 1 unit, which would be 1:1, no?
  • #5
  • Mar 11, 2008 5:27am Mar 11, 2008 5:27am
Could you not just buy fewer lots? Surely it doesn't matter what the leverage is... you just trade accordingly.
  • #6
  • Mar 11, 2008 5:43am Mar 11, 2008 5:43am
There seems to be a lot of confusion. The max leverage a broker offers (1:50 at Oanda) doesn't mean that you really use it. It's more the amount of margin which is used.

Example: Your account is $100K.

Leverage: 50:1
That means that you can buy up to 5,000,000 units of EUR/USD (which are 50 lot). But of course you can only buy 1 standard lot if you want to. In that case you would use an effective leverage of 1:1 even if is set to 50:1.

BTW: If you buy 1 unit at Oanda this is 0.00001 standard lots as 100,000 units at Oanda = 1 lot.

So Oanda should be fine as well as any other broker.

Regards - Xaron
  • #7
  • Mar 11, 2008 5:49am Mar 11, 2008 5:49am
Quoting djmetric
Could you not just buy fewer lots? Surely it doesn't matter what the leverage is... you just trade accordingly.

Well said. I dont understand why leverage can be a problem. "Just trade accordingly"
Why do people only post a nice trending period chart?
  • #8
  • Mar 11, 2008 6:20am Mar 11, 2008 6:20am
Brainwrek, I suggest you read up a bit about how leverage works. In short, it's up to you how much leverage you want - up to a maximum set by your broker. As long as you don't approach that maximum, you're good to go. Oanda will do you just fine.
  • #9
  • Mar 11, 2008 6:24am Mar 11, 2008 6:24am
Quoting Xaron
There seems to be a lot of confusion. The max leverage a broker offers (1:50 at Oanda) doesn't mean that you really use it. It's more the amount of margin which is used.

Example: Your account is $100K.

Leverage: 50:1
That means that you can buy up to 5,000,000 units of EUR/USD (which are 50 lot). But of course you can only buy 1 standard lot if you want to. In that case you would use an effective leverage of 1:1 even if is set to 50:1.

BTW: If you buy 1 unit at Oanda this is 0.00001 standard lots as 100,000 units at Oanda = 1 lot.

So Oanda should be fine as well as any other broker.

Regards - Xaron
Dammit, this is too complicated.

But Xaron, thanks to your explanation, I think I'm understanding this concept... TRUE leverage vs. MAXIMUM leverage...

So the broker lists the leverage as 100:1 (or whatever) on each individual trade. But I'm looking at my total exposure across ALL trades.

So effectively, with $100,000 in my account if I have:

(1) $100,000 AUD/USD trade
(2) $100,000 NZD/USD trade
======================
.... $200,000 TOTAL = 1:2 TRUE leverage

AND/OR

(1) $100,000 AUD/USD trade
(2) $100,000 NZD/USD trade
(3) $100,000 GBP/USD trade
======================
.... $300,000 TOTAL = 1:3 TRUE leverage

Can someone confirm/deny that this is correct?

I am piss poor when it comes to percentages and equations and stuff. My mind is very spatial, and I literally need to draw a picture sometimes to grasp a concept like this. I know it's weird, but...

Thanks guys.
  • #10
  • Mar 11, 2008 6:49am Mar 11, 2008 6:49am
Instead of, " Hey guys does any one offer a thousand to one leverage ?"

refreshing to hear, "I'd like to find the lowest levered account out there."

No matter it's $100 or more or less or any size or amount.

Good way to start off thinking if you hope to move large sums of cash thru the markets one day.

Side note: Could you imagine someone placing a huge sum with a retail MM
and trying to trade hundreds to one leverage ?
1) they probably would make them do trades 10 mio or 20 mio at a time.
2) the account would certainly be on manual ex
3 at the end of the day, they'd stick it to the guy so deep he wouldn't know
which d*ck was his and which one was the brokers.

Back to point: alot of ppl bought gold with cash a couple years ago.
No leverage, just green paper for yellow metal. Still worked out fine.

In 2005, $100 bought maybe a dozen circulated silver dollars.
They doubled in value. For a working guy, that's a sweet deal.

I took 100 bucks one time and bought everyone in the tavern a beer.
I got two thank yous and a handshake, but I didn't use leverage !

I think that sums it up.

BTW: Seeing that it's 100K, you can buy everyone at FF a beer and
you won't have to use any leverage. What a guy !!
  • #11
  • Mar 11, 2008 7:07am Mar 11, 2008 7:07am
Quoting Xaron
There seems to be a lot of confusion. The max leverage a broker offers (1:50 at Oanda) doesn't mean that you really use it. It's more the amount of margin which is used.

Example: Your account is $100K.

Leverage: 50:1
That means that you can buy up to 5,000,000 units of EUR/USD (which are 50 lot). But of course you can only buy 1 standard lot if you want to. In that case you would use an effective leverage of 1:1 even if is set to 50:1.
Exactly, of course they and other brokers offer 1:1 leverage. Those higher leverages are just the maximum. Just buy/sell the same amount you deposit.

And btw, although Oanda declares it has 50:1 leverage you can't trade E/U on a leverage of even 30 there though the pip worth for it is standard. I don't know how they count it but it's about twice smaller actually, you trade at 25 and you have about 10% of your account left as free margin only.
On the path to Enrichment.
  • #12
  • Mar 11, 2008 7:15am Mar 11, 2008 7:15am
Quoting Jurrasic
And btw, although Oanda declares it has 50:1 leverage you can't trade E/U on a leverage of even 30 there though the pip worth for it is standard. I don't know how they count it but it's about twice smaller actually, you trade at 25 and you have about 10% of your account left as free margin only.
That's because the margin requirements refer to the first currency (in that case EUR). So with a 1,000 EUR account you can buy/sell 50,000 units at 1:50.

With a dollar account you could buy 50,000 units for every USD/XXX pair...

Regards - Xaron
  • #13
  • Mar 11, 2008 8:01am Mar 11, 2008 8:01am
  •  007
  • | Joined Jun 2007 | Status: "Undisciplined Trader" | 49 Posts
Quoting Brainwrek
Dammit, this is too complicated.

But Xaron, thanks to your explanation, I think I'm understanding this concept... TRUE leverage vs. MAXIMUM leverage...

So the broker lists the leverage as 100:1 (or whatever) on each individual trade. But I'm looking at my total exposure across ALL trades.

So effectively, with $100,000 in my account if I have:

(1) $100,000 AUD/USD trade
(2) $100,000 NZD/USD trade
======================
.... $200,000 TOTAL = 1:2 TRUE leverage

AND/OR

(1) $100,000 AUD/USD trade
(2) $100,000 NZD/USD trade
(3) $100,000 GBP/USD trade
======================
.... $300,000 TOTAL = 1:3 TRUE leverage

Can someone confirm/deny that this is correct?

I am piss poor when it comes to percentages and equations and stuff. My mind is very spatial, and I literally need to draw a picture sometimes to grasp a concept like this. I know it's weird, but...

Thanks guys.
None of your answers are correct....but don't worry much about that cause it's just a common misconception in my observation regarding about those terminology.

Give it a go with this formula: {(base currency/ home currency)* position sizing/} account balance
  • #14
  • Mar 11, 2008 3:13pm Mar 11, 2008 3:13pm
Quoting 007
None of your answers are correct....but don't worry much about that cause it's just a common misconception in my observation regarding about those terminology.

Give it a go with this formula: {(base currency/ home currency)* position sizing/} account balance
What's wrong with my answers? I'm just going off of what Xaron posted earlier in this thread. I don't get it.

And your formula makes zero sense to me.
I don't think you understand what I'm talking about.
  • #15
  • Last Post: Mar 12, 2008 4:21am Mar 12, 2008 4:21am
  •  007
  • | Joined Jun 2007 | Status: "Undisciplined Trader" | 49 Posts
Quoting Brainwrek
(1) $100,000 AUD/USD trade
(2) $100,000 NZD/USD trade
(3) $100,000 GBP/USD trade
======================
.... $300,000 TOTAL = 1:3 TRUE leverage
At the moment

AUD/USD = 0.9293 ------> {(0.9293/1)*100000}/100000 = 0.9293
NZD/USD = 0.8007 ------> {(0.8007/1)*100000}/100000 = 0.8007
GBP/USD = 2.0093 ------> {(2.0093/1)*100000}/100000 = 2.0093

hence: 0.9293 + 0.8007 + 2.0093 = 3.7393 is your leverage used.
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