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rather confused?!

  • #1
  • First Post: Jan 4, 2009 11:51am Jan 4, 2009 11:51am
Happy new year all and happy trading,

I'm demo trading right now on IBFX.
- I want to trade with a $2000 account
- I'm still unsure of the leverage, most prob 200:1
- I plan to trade with EUR/USD
- 4Hr time frame, starting my trade round 4pm (GMT)

Having said that I'll metion what's confusing: When i tried to place a demo trade, say buy, the maximum volume i could place on a trade was 50.00. Now this is how i interpret it, please correct me if i'm wrong:
- say i place a trade to go Long
- i place the volume of 50.00 (for arguments sake)
- the spread is 2 pips, so i'm automatically in a $100 loss
- the trade moves Long as predicted by 6 pips
- so the first 2 pips bring me to evens, then the next 4 bring me to (4 * 50.00 = $200)
- that would mean i've made a profit of $200 on that trade

Is the above scenario correct?

Thank you all for reading,

pip_rugrat x
  • #2
  • Jan 4, 2009 12:19pm Jan 4, 2009 12:19pm
Quoting pip_rugrat
Happy new year all and happy trading,

I'm demo trading right now on IBFX.
- I want to trade with a $2000 account
- I'm still unsure of the leverage, most prob 200:1
- I plan to trade with EUR/USD
- 4Hr time frame, starting my trade round 4pm (GMT)

Having said that I'll metion what's confusing: When i tried to place a demo trade, say buy, the maximum volume i could place on a trade was 50.00. Now this is how i interpret it, please correct me if i'm wrong:
- say i place a trade to go Long
- i place the volume of 50.00 (for...
I can only suggest you demo trade for a while if only to grasp the basics of Money Management (MM).
If you put that level of trade on at this stage you'll be wiped out quicker than a wounded antelope in the lion enclosure at the local zoo.
IBFX do micro-mini accounts where you can trade really small lots (effectively 0.001 cents) as you start this journey.
Don't start a live account trading anything larger than this (assuming you're serious about this as a long-term career).
There's plenty of stuff around here to teach you about MM and how to calculate True Leverage and Broker Leverage and you need to understand the difference. Check out Diallist's thread here.
  • #3
  • Jan 4, 2009 12:30pm Jan 4, 2009 12:30pm
Quoting pip_rugrat
Happy new year all and happy trading,

I'm demo trading right now on IBFX.
- I want to trade with a $2000 account
- I'm still unsure of the leverage, most prob 200:1
- I plan to trade with EUR/USD
- 4Hr time frame, starting my trade round 4pm (GMT)

Having said that I'll metion what's confusing: When i tried to place a demo trade, say buy, the maximum volume i could place on a trade was 50.00. Now this is how i interpret it, please correct me if i'm wrong:
- say i place a trade to go Long
- i place the volume of 50.00 (for arguments sake)
-...
If you wanted to trade 50 Lots with a 2k$ account which is:
1. Plain Stupid
2. Impossible due to margin restrictions

the trade would look like this.
Spread is 2 so your initial loss is 2 * 50 * 10$/Pip (since we are using 100k standard lots. With micro lots its 1$/pip ) = 1000$

If price moves 6 pips in your favor you gain 4 (6-2) * 50 Lots * 10$/Pip = 2000$.

Aslong as you are not stupid enough to overleverage your account there is nothing wrong with using leverage higher than 1:200.
  • #4
  • Jan 4, 2009 1:05pm Jan 4, 2009 1:05pm
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  • #5
  • Last Post: Jan 4, 2009 1:20pm Jan 4, 2009 1:20pm
More like:
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