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Starting with OANDA and bad leverage from them

  • #1
  • First Post: Dec 18, 2006 2:28pm Dec 18, 2006 2:28pm
I'm funding my account from OANDA and they don't give out as much leverage as other brokerages. The max they give is 50:1. I need to use OANDA because i hear they are the only ones that really respect news trades.

How much money should i deposit to be safe (so i don't get margin called after goin down a little) and be profitable (assuming i make decent amount of pips)

I am not Bill Gates, i am a college student. I have a decent amount of money. What you guys say?

Should my margin look like 50K? 100K? 200K? more?

Thanks.
  • #2
  • Dec 18, 2006 2:34pm Dec 18, 2006 2:34pm
Quoting MPR_NY
I'm funding my account from OANDA and they don't give out as much leverage as other brokerages. The max they give is 50:1. I need to use OANDA because i hear they are the only ones that really respect news trades.

How much money should i deposit to be safe (so i don't get margin called after goin down a little) and be profitable (assuming i make decent amount of pips)

I am not Bill Gates, i am a college student. I have a decent amount of money. What you guys say?

Should my margin look like 50K? 100K? 200K? more?

Thanks.
I am using oanda and the 50:1 leverage has never been an issue for me. If that's not enough for you maybe you need to reconsider your money management. I do not how you trade and what kind of MM you employ. If you could be more specific I might be able to give you a better answer.
Stubbornly persistent
  • #3
  • Dec 18, 2006 2:45pm Dec 18, 2006 2:45pm
Your gonna open a 50K + acct with a company and you don't even know how to figure margin?
If you want to give the money away - why don't u go down to a local shelter or something. That way you can actually do some good with it.
In trading, there is no bullshit. You either make money or you don't.
  • #4
  • Dec 18, 2006 2:50pm Dec 18, 2006 2:50pm
"I am using oanda and the 50:1 leverage has never been an issue for me. If that's not enough for you maybe you need to reconsider your money management. I do not how you trade and what kind of MM you employ. If you could be more specific I might be able to give you a better answer."



I am more on the conservative side since i'm new to forex. I trade the news and i use a program which i need to break at least 200 a month.

For example i ussually try to trade 20,000 and after a spike i close half my position and let the rest ride a bit before closing. Is it clear enough? cause i'm new to this so i might have trouble myself explaining stuff.
  • #5
  • Dec 18, 2006 2:52pm Dec 18, 2006 2:52pm
50K? 50K in margin i mean not 50K of my own money.

I believe $1,000 of my own money is 50K
  • #6
  • Dec 18, 2006 3:00pm Dec 18, 2006 3:00pm
There is a sticky at the top of this beginners forum entitled Money Management. Reading and understanding that is essentiel to your future success.
You are wanting to make a consistent 20% monthly return on your 1000 so you can pay for some news trading program. Sorry Dude, but my original sentiment still applies.
Quoting MPR_NY
50K? 50K in margin i mean not 50K of my own money.

I believe $1,000 of my own money is 50K
In trading, there is no bullshit. You either make money or you don't.
  • #7
  • Dec 18, 2006 3:06pm Dec 18, 2006 3:06pm
okay, you're clearly clueless, so let me help you out.

Don't think in terms of what the money represents, think of what you have.

Talk in terms of the amount of money you're thinking of putting in, which for a mini is usuallly anywhere from $250 to $2000. If you start an account with more, you're usually opening a standard account.

I think the highest you'll find a standard account offering is 1:100 leverage, and it goes down from there.

The highest leverage for a mini account is 1:400.

$1000 is plenty for your first forex account, especially if the leverage is 1:50 as it is at oanda. Some people(including me) think it's better to start off with a smaller amount on your first account since the majority of traders lose their first account. But don't thikin of it as "losing", think of it as "learning". The other arguement is a smaller account makes the inexperienced trader risk more than they should, and then they lose it a lot quicker. It's up to you.

I wish I could remember how oanda works exactly, but do you know what percentage 20,000 units is of your whole account? If you're new to forex anything over 10% is bad. Trading news can seem simple at first but it just takes one crazy news day to show you how unpredictable it can be. It's something I would only recommend for more expirenced traders. You should check out OrangeRoshan's trading systems. They're simple and consistant, perfect for new traders.

http://www.forexfactory.com/forexfor...ead.php?t=9471
  • #8
  • Dec 18, 2006 3:50pm Dec 18, 2006 3:50pm
i will find out for you soon. i'm tied up at work
  • #9
  • Dec 18, 2006 4:36pm Dec 18, 2006 4:36pm
Quoting MPR_NY
i will find out for you soon. i'm tied up at work
First of all go and read this:
http://www.forexfactory.com/forexfor...ead.php?t=3690
Untill you will have a crystal clear understanding of money management and its importance you should not put your hard earned cash at risk. As stated above you seem pretty clueless about what you are doing. I would advise that you educate yourself. It might take some time and require a lot of work and patience but it will pay off in the end.
Good luck!
Stubbornly persistent
  • #10
  • Dec 18, 2006 5:23pm Dec 18, 2006 5:23pm
Hi MPR_NY,

From one noob to another, be careful (!!!). I had almost the exact same questions when I opened my first live account (also with OandA). I had successfully traded the news in demo for a couple months and thought it was time to go live. I opened an account with $250 since (fortunately) I read that there was a huge difference between live trading and demo trading and I figured I should risk as little as possible on my first acct. I almost signed up with GFT since they offer 400:1 leverage. My thinking was "I'll get rich 8x faster!" not "I'll kill my account ASAP".

I made a killing for several weeks adding 50% to my account, but then the spread got wider and hit both of my entries, I got whiplashed out of several trades, and I lost all of my winnings and a little of my original capital before deciding I should really learn how to trade instead of just gambling on the news.

I'm not rich (yet ;-) ), I'm not a guru trader (yet ;-) ), and I don't have any real constructive criticism since I'm still learning, but if you're thinking as much like I did when I started as it sounds, I'd save your money for the moment and have more when you're really really really ready. If nothing else, then you can even use 20:1 leverage and still make the same $$$ :-)

You're in the right place though. I check this forum a couple times a day, and have learned a remarkable amount in the last 6 months.

Just my 2 pips. Good luck!

Seavo
  • #11
  • Dec 18, 2006 5:23pm Dec 18, 2006 5:23pm
Oh, and I still use oanda. They've been great so far.


Seavo
  • #12
  • Dec 18, 2006 6:55pm Dec 18, 2006 6:55pm
I assuming when you say usually trade, that’s a demo... Sound like your need to break even for the RSS... If you can't afford the risk... then I would wait until you can. You need to put down the calculator and stop pushing + button. I have nothing wrong with the RSS but Forex is Forex and you still need to take a responsible approach to any type of trading.<?xml:namespace prefix = o ns = "urn:schemas-microsoft-com:office:office" /><o></o>



Quoting MPR_NY
"I am using oanda and the 50:1 leverage has never been an issue for me. If that's not enough for you maybe you need to reconsider your money management. I do not how you trade and what kind of MM you employ. If you could be more specific I might be able to give you a better answer."



I am more on the conservative side since i'm new to forex. I trade the news and i use a program which i need to break at least 200 a month.

For example i ussually try to trade 20,000 and after a spike i close half my position and let the rest ride a bit before closing. Is it clear enough? cause i'm new to this so i might have trouble myself explaining stuff.
  • #13
  • Dec 18, 2006 8:32pm Dec 18, 2006 8:32pm
Hi there,
From someone who has been in the game for 1.5 yrs, and still considers themself a total newbie, my suggestions would be as follows:

1. Read as much as you can about forex first. Understand what you are getting into, what it is, why there are currency pairs, what they actually mean, what the co-relations are etc. I am a cars person, and if you are as well, then let me ask you this - when you are in the market for a new car, do you just go and buy a 40K car because that is what you were in the market to spend, or do you go and research every car in that price range, what is petrol consumption, the maintainence costs, the ongoing costs, the interior of the car, exterior of the car etc (hope you get the pic)

2.Then understand the terms in fx trading, ie market/limit orders, sl and tp, support and resistance, pivot points, technical analysis, fundamental analysis, margin required, margin used. What does all this mean. To give you a real life eg. it took me several losses to figure out that the margin required for 10K eur/usd position is different to 10k gbp/usd position. Why is that the case? Once you can answer this question, you are on your way to understanding the market. Another eg. Oanda takes 2% margin of the currency you are dealing in, FXCM takes 2K per 100k of trade.

3. Leverage - the famous double edge sword of fx. It seems to be the least understood thing amoung beginners, and the most common reason for account blow ups. Just because the broker gives you 400x lev. doesn't mean you have to use it. 400x lev will make lots of $$ with small pips, but the reverse is also true. As someone in this thread has said, you've got to stop pressing the + button. If you haven't come across the saying "capital preservation is aim of the game, and the profits look after themselves" then you haven't read enough. You don't need to be an excel guru to make a simple spreadsheet that will show you what a 20 pip loss will do to you accont in $$ terms.

4. Open a demo account. Practice. Document everything. Look at it everyday, and see if you can learn from it. Now start reading about systems, strategies, and eventually u will come up with one of your own. Demo this until you can repeat the same profitable result for a few mths. Then go live.

5. Critical Mass - This is my favourite!! It is the $$ required to make fx trading worth while. From what you have written, I am assuming that you are subscribed to a service that trades news. There are 3 out there that I know of that are reasonable, as I have tried all of them. Problem is that with 2 of them, they cost a heafty sum. If you have 50K, not a problem, but with 1k, you need to make 20% to 30% pm to be with costs etc. You need to work out what is a realistic pip value per mth that you can make (anything over 100 is getting into optimism, as a beginner), and then work out how much $$ you need to b/e with costs. The rest of the plan is upto you, as it will vary with your risk profile, experience etc.

I hope this will give you something to think about, and get you started in the right direction. This is the best time to begin in forex, as it is the best time to not trade, due to reduced liquidity, bigger players taking time off, holidays etc. Hence good time to get the reading done, think about things etc, rather than thinking about when the next trade will be.

Cheers,
K
  • #14
  • Mar 1, 2007 7:22am Mar 1, 2007 7:22am
Quoting kermut
Hi there,
From someone who has been in the game for 1.5 yrs, and still considers themself a total newbie, my suggestions would be as follows:

1. Read as much as you can about forex first. Understand what you are getting into, what it is, why there are currency pairs, what they actually mean, what the co-relations are etc. I am a cars person, and if you are as well, then let me ask you this - when you are in the market for a new car, do you just go and buy a 40K car because that is what you were in the market to spend, or do you go and research every car in that price range, what is petrol consumption, the maintainence costs, the ongoing costs, the interior of the car, exterior of the car etc (hope you get the pic)

2.Then understand the terms in fx trading, ie market/limit orders, sl and tp, support and resistance, pivot points, technical analysis, fundamental analysis, margin required, margin used. What does all this mean. To give you a real life eg. it took me several losses to figure out that the margin required for 10K eur/usd position is different to 10k gbp/usd position. Why is that the case? Once you can answer this question, you are on your way to understanding the market. Another eg. Oanda takes 2% margin of the currency you are dealing in, FXCM takes 2K per 100k of trade.

3. Leverage - the famous double edge sword of fx. It seems to be the least understood thing amoung beginners, and the most common reason for account blow ups. Just because the broker gives you 400x lev. doesn't mean you have to use it. 400x lev will make lots of $$ with small pips, but the reverse is also true. As someone in this thread has said, you've got to stop pressing the + button. If you haven't come across the saying "capital preservation is aim of the game, and the profits look after themselves" then you haven't read enough. You don't need to be an excel guru to make a simple spreadsheet that will show you what a 20 pip loss will do to you accont in $$ terms.

4. Open a demo account. Practice. Document everything. Look at it everyday, and see if you can learn from it. Now start reading about systems, strategies, and eventually u will come up with one of your own. Demo this until you can repeat the same profitable result for a few mths. Then go live.

5. Critical Mass - This is my favourite!! It is the $$ required to make fx trading worth while. From what you have written, I am assuming that you are subscribed to a service that trades news. There are 3 out there that I know of that are reasonable, as I have tried all of them. Problem is that with 2 of them, they cost a heafty sum. If you have 50K, not a problem, but with 1k, you need to make 20% to 30% pm to be with costs etc. You need to work out what is a realistic pip value per mth that you can make (anything over 100 is getting into optimism, as a beginner), and then work out how much $$ you need to b/e with costs. The rest of the plan is upto you, as it will vary with your risk profile, experience etc.

I hope this will give you something to think about, and get you started in the right direction. This is the best time to begin in forex, as it is the best time to not trade, due to reduced liquidity, bigger players taking time off, holidays etc. Hence good time to get the reading done, think about things etc, rather than thinking about when the next trade will be.

Cheers,
K
Excellent post
Trade what you see, not what you think.
  • #15
  • Mar 1, 2007 7:51am Mar 1, 2007 7:51am
I think the only reason leverage higher than 50:1 exists is for brokers to take money from all the unsuspecting rookie traders. They package it as a great way to make big money fast but fail to also advertise that it's a great way to lose big money faster.
  • #16
  • Mar 1, 2007 9:28am Mar 1, 2007 9:28am
Margin is nothing but good faith money you put up when taking a trade.

If you trade 1 standard lot EURUSD which is I believe 100,000 units in OANDA terms your margin would be about $2500. If you go down 1 pip, that's $10. So if you are ready to go down 100 pips without a possible margin call you need around $3500. Normally dealer will sell you out whne your equity around 100-80% of your required margin. That's the math. You can divide it by 10 or 100 if planning trading smaller allocations.
  • #17
  • Mar 1, 2007 10:21am Mar 1, 2007 10:21am
mpr,

be aware that you can trade news releases with oanda, but usually the spread goes up quite a bit and there might be some slippage cause oanda does not provide true limit orders, just market orders
  • #18
  • Mar 1, 2007 11:20am Mar 1, 2007 11:20am
I use OANDA. I had the same concern with them at first...but it turns out that it's not an issue.

You should not risk more than 5% of your total account on any given trade...and perhaps it's better to keep that risk down to 2% or 3% (I was using 5%, now I'm using 3%).

Use their PIP/Profit calculator to calculate how many units you need to trade, like this:

1. Calculate the risk, i.e. 3% of your account (or whatever percentage)
e.g. $1000*3% = $30

2. Use the PIP/Profit calculator and enter all the information except units (we'll be figuring out how many).
e.g. Let's say you are going to do a BUY order on USD/JPY, enter that. Also enter the open (buy) price and for the close price, put the price where you have your stop loss. Let's say we are buying at 117.47 with a 30-pip stop loss. Set open to 117.47 and close to 117.17.

3. Now look at the P&L. Keep changing the number of units until the P&L is close to the risk ($30) but without going over.
e.g. In our example, 11717 units will make sure the risk is $30 or 3% of the account.

4. Go the their resources page, FXMath, Margin Calculator (http://www.oanda.com/products/fxmath/margin.shtml). Enter in all the information: the base currency of your account, the pair you are trading, the number of units (which we found from the previous step), the leverage...and hit "calculate."
e.g. In this example for the USD/JPY trade on a USD-funded account the required margin at 50:1 leverage is $234.34...does that within the account size of $1000? Sure does! You're fine.

This same process will work for any account size.

Don't be fooled by the marketing hype of extremely high leveraging. Many brokers offer such high leveraging because that will amplify their spread revenue...and they know that new uninformed traders will just go wild with it (and probably blow out their acccounts).

Make sensible trades: DO have stops and DO plan your entry and and stop point before every trade. Don't just jump in with a position leveraged up to the moon or you'll shit your pants on every minor fluctuation.

Maybe you're tired of hearing this by now, but money management is a very very very important part of your entire trading plan (you do have a trading plan, right?). Some will say that it's more important than your trading strategy itself (well I think they're both important). Here's a post I wrote detailing the money management method that I use: http://www.forexfactory.com/showpost...29&postcount=6

Best of luck on your new trading adventure!
-mathematician
  • #19
  • Mar 2, 2007 4:04pm Mar 2, 2007 4:04pm
Dear MPR_NY,



1. From the strategy you've explained, I'm 100% sure that you will lose all your money. Taking into account, spreads and whipsaws, trading the news blindly is a huge mistake. And I've heard that Oanda widens their spreads during news releases. Add to this a 10-15 pip s/l, and there is a good chance that you'll lose all your money within a couple of months. Please listen to what everyone is saying.

2. You need a robust strategy to make successful trades. There are several FREE and WORKING systems on this website, and you could always make up your own and BACKTEST it. Why spend $200 on a useless news trading system (all news trading systems are useless) when you can get a good one for FREE?

3. You need EXPERIENCE. Psychology is extremely important for traders. Revenge trading is very common among newbies. And to tackle that problem, you need experience. Open up a micro account ($100) and trade micro lots ($0.10/pip). Do this for atleast a couple of months and prove to yourself that you can handle larger trades.

4. There are several good threads on this site, and they will all help you expand your knowledge of the markets.

5. www.babypips.com <------ Most of what a newbie needs to know, presented in an organized fashion.

6. Risk only the money you can afford to lose. Don't risk tuition money. You need to be very calm, patient and disciplined in order to be successful.


Good Luck,
Blueshift.
  • #20
  • Mar 2, 2007 6:34pm Mar 2, 2007 6:34pm
Quoting mathematician
I use OANDA. I had the same concern with them at first...but it turns out that it's not an issue.
I love using Oanda, and leverage is not an issue. I have my account set to 10:1 leverage. I will trade about 1/4 of the allowed units, which is about 2.5% of leverage on 100:1 if I am not mistaken. I wont touch the leverage setting, this way if I ever do something stupid I wont hurt myself too bad. :
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