Locked (hedge) trade can face a Margin Call

It's very relevant as to when you locked your position. You can't expect them to pay you back for losses that you already had.

In fact, when you locked your position .. you locked in those losses!

You certainly were no longer smart money, as you could not participate in any upside of the E/U.

I think the best you can expect them to do is pay you back any losses above and beyond that you locked in yourself.

Easy!!!! Stay away from fxcm and withdraw your money from them while u can before they gobble up all your money

You seem a bit paranoid. Now you're accusing someone of being paid to "mislead" others???

it's the fact (even FXCM admitted the technical or intentional error)
1# if hedging official announced that it's allowed when acct confirmed
moved to UK. therefore, margin call shouldn't be happened to all locked/hedged positions(when sufficient margin)
2# the closing prices were manipulated to cause losses to account owner

do u think any ordinary human being & victim to such as this kind of matter will not acted 'freak' or 'paranoid' with hearing ppl saying something not
standing at his side?

No need to pinpoint his emotional reaction as it's obviously heated already. it's natural. This has turned into complaint thread, can't u feel?
If you can't stand the way it's, stay aside and observe and no need
to add noises to emotional flies.

I'll observe this case before i decide to put more money with this broker.
I hope FXCM will be fair to resolve the case. We want FXCM knows that
many ppl here are witness the case. Your reputation is at stake now.....

People are watching you FXCM while i hold my money tight

The bottom line is that he has to take it up with FXCM and any authorities that might have jurisdiction in the matter. This is obvious to those with half a brain. Coming to a forum and ranting and raving accomplishes absolutely nothing, except maybe providing some entertainment.

I did some calculations to try to sort out this mystery.
Numbers between parenthesis are order numbers for the trades taken, as per the statement dates.

(1) usdjpy buy 1 lot 97.133 sell (11) 94.812 = 232.1 pips x 10 = $2321
(2) eurusd buy 2 lots 1.37051 sell (7) 1.35514 = 152.7 pips x 20 = $3054
(3) eurusd buy 2 lots 1.37051 sell (8) 1.35524 = 153.7 pips x 20 = $3074
(4) eurusd buy 2 lots 1.37051 sell (9) 1.35506 = 154.5 pips x 20 = $3090
(5) eurusd buy 2 lots 1.37054 sell (10) 1.35492 = 169.5 pips x 20 = $3390
(6) eurusd buy 2 lots 1.37054 sell (12)1.35346 = 170.8 pips x 20 = $3416

That's a $18345 locked loss on a remaining equity of about $5000 after margin? (or even if the margin cancels out - I don't know how they work with that -, it is still more than twice the equity...), plus you have two open sell positions (13) at 1.35359 and (14) at 1.35335, not locked.

Initial equity = 8000 - 81.01 = 7918.99

Margin required (assuming your leverage is 500:1 and there's no additional margin required on locking)

(1) 194.27 equity = 7724.72
(2) 274.10 x 2 = 548.20 7176.52
(3) 274.10 x 2 = 548.20 6628.32
(4) 274.10 x 2 = 548.20 6080.12
(5) 274.10 x 2 = 548.20 5531.92
(6) 274.10 x 2 = 548.20 4983.72

At this point, you are holding 11 FULL lots at a total value of roughly $110 per pip, which leaves you room for about only 46 pips against you (and I'm not counting the spread either).

When you locked your first EURUSD position - number (2) - at 1.35514, you were already 153 pips below the open price on this one and the other buys opened at 1.37051, and 156 pips on the other two opened at 1.37050. You don't show your chart for USDJPY but at the time you opened the first EURUSD sell, it was at about the price of your sell later on the 17, thus about 230 pips under !!!

You should have been margin called much earlier... at around 1.3660... additionally, in the end you weren't perfectly hedged as there are two additional sell positions taken with 2 lots each!

When a hedged position is closed together by "close by" or "multiple close by" option, the profit or loss as well as effective closing price, appears on only one of them (either buy or sell) and the other one appears as closed at zero thus showing the original opening price as close price. However, the price at which they show the "close" is way much farther than the true price where a margin call should have occurred... I can figure out no idea on why did they chose that arbitrary price.

All this is really weird, especially the fact that you say you still had money showing in the account (BTW just in case, on MT4 the remaining balance shows under "free margin" - the balance always shows the whole amount but the Equity and Free Margin should have been changing... and I wonder why you kept opening trade after trade, didn't you do the math first (how many lots can be traded with your available balance and what is the value of the respective pip) and noticed that something was wrong in the very beginning? That is much weirder indeed to me.

I don't like to favoritize brokers at all, but I think that they are being fairly generous at offering you more than your total deposit when in fact the margin call should have been executed before you locked any of the positions... (and none of the initial buy positions went ever in profit) and just in case, I'm not "getting paid" to say this, but I really do like to find out the real truth behind any confusion. Hope it helps.

Great work breaking that down -- must've taken a bit of time..

I think his leverage is 400:1 -- Would that change the outcome?

Margin required at 500:1 is rounded $2938. Would be $3672 at 400:1, so 6 or 7 pips less left on total available, that is 39 or so instead of 46 (and even earlier MC)... In all this I am not taking into account the spreads or the minimum percentage before MC as I don't know what are FXCM's percentages. At my broker it is 5% but I am assuming 0% for easier calculations.

Exactly. But wait you are obviously paid by FXCM (with the money he lost)...

What happend is indeed a bit strange but m88 is not entierly innocent because he oviously had no Idea what he did with his account.
I doubt that there had been such a confusion if he had opend only 0.5 standard lots and hedged them out.

I can only speak for Alpari UK but there you can have such an excessive leverage of up to 500:1 only if your balance is below $5000. I can't imagine a broker offering such a leverage for bigger accounts. For everything above $5k you have a leverage of 100:1 max.

the leverage = 1:200.
all the position lock.
anyway thanks for your effort but u did a wrong calculation

what will u do if they don't give u back the money that u want ?

Yes, but how much in the way of losses did you lock in? Why do you imagine that FXCM should pay you back those losses that you did lock in?

Maybe... but the data are on the statement for everyone to see
Now at 1:200, much worse then!

the major issue is the locked position imposibble to face margin call.
when the market walk in my favor,i able to unlock those lock position.
even they pay me usd11200 ,i still facing huge loss.

i believe this is their technical issue,that's y they willing to pay me.but usd 11200 unable to recover my huge loss when this account can turn to usd50 000 for yesterday.i'm not going to accept this kind of payment when the fault was cause by them.this is really unfair for me.

my trade are close at the time 110pips off the market price.why the locked trade not close at 1.34xx level?but when the price back to 1.35xx level,FXCM close my locked trade?what is the LOGIC behind this,when i have opportunity to unlock all my trade and turn to huge profit?

How much was your intial deposit? 8k? Now you get 11k that's 3k Profit.

If you really belive you can get rich by overleveraging your account well
you will lose all your money even if no broker is playing tricks on you.
You seem to fail at understanding what leverage is because trading at 1:200 makes everything much worse.

At 1:200 you need 11000 USD just to keep all your 22 Lots open. That's why you get 11k from FXCM
because you got margin called once your equity dropped to 11k and there was not enough money in your account
to keep 22 Lots open (which is utterly stupid I hope you understand that sooner or later).
22 Lots * 100k = 2.2 Million. Divided by 200 -> 11.000 USD

I still don't get it. You said you were full hedged so no margin call could occur. Ok.
Then you say that the market did walk in your favor and you could unlock those positions? How can the market walk in your favor if you are completely hedged? Your net asset value won't move a single cent no matter if the market goes up or down. That can only mean that you've added another long and in that case you are not full hedged anymore. Maybe that single added long just went some pips against you (as it usual does due to market noise) and then you got your margin call because you still had that huge unrealized (hedged) loss?

Where does the $25000 amount come from and why doesn't it show in the statement totals?

You were trading 11 full standard lots (as it shows in the statement and double checked with the amounts per lots) which represent $110 which is deducted from your equity every time one pip goes against you.

Total Balance minus losses (at the moment of the lock) = equity
Equity minus margin required = free margin
Margin percentage =

When Free Margin falls down the equity because the trade goes wrong it should show a negative value, and if the margin percentage goes below 100%, you are starting to eat your "locked margin" up. At my MT4 broker, for example, when this percentage reaches 10%, they can start closing positions and when it reaches 5%, they close all the remaining positions. Of course being equally hedged, positions were locked, but locked with a loss that was more than twice your initial balance! (average 155 pips * 10 lots plus around 230 pips * 1 lot on USDJPY = the amount I calculated in my earlier post, about $18000 total locked LOSS at the very moment that you clicked on the SELL button for each one of them = 155 * $100 = 15500 plus 230 * 10 = $2300).

If total balance at the beginning is what is shown in the statement (total deposits minus total withdrawals), you were allowed to sustain a loss of more than twice your total equity BEFORE even attempting to hedge, which was done the day after or two days after depending on the positions, as the statement shows with date and time. Checking the charts, at no moment either the U/J or the E/U did move above the open price, so they went against all the way down.

It is impossible in Forex to lose more than what is in the account, thus this was obviously a technical glitch which allowed you to "borrow" more than what your equity was, and losing almost twice that equity additionally to the total initial balance! Maybe that's where the misunderstanding is? Your statement shows a total loss of about $23000 but you didn't have ever that amount on the account, also as per what the statement shows. You can't lose something that you didn't have!

You are absolutely correct in saying that if the positions are locked they shouldn't get a margin call (except if you leave them so much time that the negative swap eats all your free margin up...) BUT there was an error that allowed you to keep on buying and buying and buying despite the fact that already with the margin required at 200:1

One standard lot at 100:1 requires as margin = the actual price of the currency pair (open price) multiplied by 100000 and then divided by 100.
The margin will vary depending on the price at the moment you open the position.

At 200:1, cut that amount in half.
For example, if EURUSD is trading at 1.3750 ASK price, at 100:1 the MR would be $1375 and at 200:1 it would be $687,50 PER EACH LOT traded, thus $1375 on 2 lots.

Based on the open prices for your BUY positions and the amount of lots traded, the margin required after having opened the 5 EURUSD and 1 USDJPY positions was 7338,17. Just for margin.
If the total balance was 7918.99 as it shows on the statement (deposit minus withdrawal), and according to the above formulas, we would have:
7918.99 minus 7338.17 = 580.82 equity
580.82 / 110 (pip value for 11 lots) = 5 pips !!!
Not even enough to account for the spread on 11 lots !!!

Then with that leverage, you wouldn't have been able to open either many of those buys.

I am assuming that you indeed were trading full standard lots because that's what the amounts in the P/L column divided by the difference in pips between open and close, express in the statement = $10 a pip is a standard full lot.

If there is any other detail that we don't know and which would invalidate all the above calculations, I apologize in advance and hope you will share it with us so we can better understand. I only base my observations on what you have given to us, which is the MT4 statement and the data it shows. Understanding the mechanics of lot/pip relationships is fundamental if one wants to apply a correct and responsible money management.

EDIT: I was wrong about the last two positions, in fact the last 4 trades are only 1 lot each, so the hedge was indeed complete, sorry for that mistake (bad sight).

Anyway the problem arises much before the first hedging position was opened: there shouldn't have been enough available free margin at that time, at least not for the last ones. Or maybe then you did hedge and unhedge several times between the first buys and the last sells, that would probably explain an increment in equity? But those intermediate trades (if taken) do not show on your statement. If this is the case, some of the history is missing.

Yes, everyone thinks they can trade themselves out of loss. This I think is the huge con game in forex. There is no such thing as unrealized loss.

Once you were down 2% in your acct, you should have closed the trade and called it a day.

I think his current balance is -5K, so that would be new balance 6K or a -2K loss.