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Help - Hedging Loss?

  • #1
  • First Post: Edited 7:53am Feb 3, 2010 5:51am | Edited 7:53am
After some replies i have to announce that this is a demo account not real , and i`m asking it to gather some knowledge about the brokers fake rules.
---------------
Hi All

I`ll explain my question using an image to be easy for every body to say their knowledge.

http://img268.imageshack.us/img268/9568/13800136.png


My other questions is:
either the answer was yes or no so i need to know if it`s a standard rule ?

or it`s depend on the broker TOS?

another question, please.

if it`s depend on the broker rule , then under which section it should be appear in the TOS ?

thanx in advance.
  • #2
  • Feb 3, 2010 6:21am Feb 3, 2010 6:21am
Quoting zx10
Hi All

I`ll explain my question using an image to be easy for every body to say their knowledge.

http://img268.imageshack.us/img268/9568/13800136.png


My other questions is:
either the answer was yes or no so i need to know if it`s a standard rule ?

or it`s depend on the broker TOS?

another question, please.

if it`s depend on the broker rule , then under which section it should be appear in the TOS ?

thanx in advance.
please don't be ignorant and stop loosing money. learn the ropes first.
  • #3
  • Feb 3, 2010 6:41am Feb 3, 2010 6:41am
It will depend on the broker.
Do they require additional margin for the new contrarian position? If so, you won't be able to hedge as there's no free margin left (-7.67)

Also if they don't, they might however have a rule not to allow hedging positions below 100% margin level. I do not think this appears on the TOS (it doesn't at my broker), you should ask support directly about this.

On the other hand, I absolutely DON'T recommend you to hedge in the situation you are in. It might be painful to take a loss and start over but you should use a much smaller position size (presently you are using a true leverage of 200:1 - most probably your brokers' full leverage capability) and you are only 17 pips down and already in the red as to margin left using GBPJPY, which is one of the most volatile pairs?

Even if your broker offers a high leverage, the more that you should risk is about 2% of your total equity. On a $500 account, you should be using micro-lots = 0.01 if your broker offers them (not even mini = 0.1 though it can be done but at a greater risk). This would allow for much more room for price to fluctuate and your trades to hopefully evolve to a profitable situation.

Hedging without free margin left? That's account suicide.
Get out ASAP while you still have enough equity to bring the account back.
A few pips more and it'll be wiped out if you don't.
  • #4
  • Feb 3, 2010 6:54am Feb 3, 2010 6:54am
Quoting zx10
Hi All

I`ll explain my question using an image to be easy for every body to say their knowledge.
Close the position. Why would you want to hedge? You accidently opened a position with a size almost hundred times as much as would be reasonable for this account size and you are losing. Close the trade before the broker will close it for you.
  • #5
  • Feb 3, 2010 7:57am Feb 3, 2010 7:57am
I called FXCM weeks ago on this and they said if your free (usable) margin drops below 0, you're on margin call and your positions are automatically closed.
If you trade in their FXCM Micro contest, where I'm fairly certain that you can trade over the Micro account limit, then you're booted from the contest.
Thus, in this fairly reasonable situation, what you did means you don't trade anymore and have to go to another broke r (situation).

In a side note, I'm on demo, only a trade with 50-80:1 leverage is not unreasonable if one has years of trading experience and has a careful watch of and plan for one's trades.
This is in a 100:1 allowable. For me at least, 50-80% of maximum allowed leverage provides a healthy number of pips in usable/free margin in case your trade goes wrong with in-trade drawdown.

Brokers' rules concerning this seemed fake to me, too, when I first started demoing forex. Now, I realize it's just sensible to adapt how skilled you are to where you must exit your trades when you're wrong.
  • #6
  • Feb 3, 2010 7:57am Feb 3, 2010 7:57am
After some replies i have to announce that this is a demo account not real , and i`m asking it to gather some knowledge about the bro kers fake rules.

so thank you very much for all the advices i got , and the sympathy you resent.

but please answer me for my questions , because it might be a big support for me to catch a big fishy broker in this market.
  • #7
  • Feb 3, 2010 8:04am Feb 3, 2010 8:04am
Quoting zx10
After some replies i have to announce that this is a demo account not real , and i`m asking it to gather some knowledge about the bro kers fake rules.

so thank you very much for all the advices i got , and the sympathy you resent.

but please answer me for my questions , because it might be a big support for me to catch a big fishy broker in this market.
if your margin drops below 0 you are in no man's land.

it's up to the broker when they enforce the margin call. some do immediately, some let you loose more.

IBFX I believe do that on 50% from open position margin required. In your case they would close the first trade when your equity drops below 160$.

There is nothing fishy about it. Don't assume that your broker is trying to screw you just because you are too stupid to learn the basics (or read the contract).
  • #8
  • Feb 3, 2010 8:21am Feb 3, 2010 8:21am
Quoting piccolo
if your margin drops below 0 you are in no man's land.

it's up to the broker when they enforce the margin call. some do immediately, some let you loose more.

IBFX I believe do that on 50% from open position margin required. In your case they would close the first trade when your equity drops below 160$.

There is nothing fishy about it. Don't assume that your broker is trying to screw you just because you are too stupid to learn the basics (or read the contract).
I can`t understand why you are so rude / inhumanity person.

did you learn forex in the hard way ?
did you was so shy to ask for any thing unclear for you?

please don`t reply to any of my topics any more.

==============

for other members:
i`m new in this forum and i don`t know how or from where to report any violet post ,
so please guide me to report this rude member to the administration .
  • #9
  • Feb 3, 2010 8:58am Feb 3, 2010 8:58am
I will try to put this as nicely as possible. Various brokers have different rules regarding margin call and whether you can open any new positions after a certain point. IBFX, as the poster said above, has a rule that you get a margin call when your account equity is 50% of the margin used figure BUT if your margin level figure gets to 100% or below they will not allow you to open any new position, even though a hedge doesn't require any extra margin.

In any broker's faq's you will find out at what figure they will restrict certain things, thats the best place to look. But as they have all said, there is nothing fishy about it.
  • #10
  • Feb 3, 2010 9:19am Feb 3, 2010 9:19am
500 bucks capital
crosses pair
1 lot initial position
doesnt know broker margin rule
using hedging like it ll help

you could learn forex with 500 bucks , but this is not the way friend
this is not demo and Im sure of that ...

get broker that can accept micro or nano or watever smallest possible unit they give... that way u ll get the best out of the 500 bux ... u ll lose it eventually might as well lose while learning something ...
To Live is the rarest thing in the world , Most people exist , that is all
  • #11
  • Feb 3, 2010 10:15am Feb 3, 2010 10:15am
I`m really sorry to said this , but there is some guys here and there that are really hopeless / helpless.

here is an image for the demo account, i couldn't submit the password for it because i did not save it or and did not submit a real email when i register the demo account.

Important note: my problem is not with LiteForex.com , i just use there demo account to prove something no more.

who want to know more about my problem then he have to visit the broker section in this forum.

http://img25.imageshack.us/img25/8065/democ.png

you can compare between time/deal volume / open price with the image in the original topic above.
  • #12
  • Feb 3, 2010 10:26am Feb 3, 2010 10:26am
Quoting luckylady
I will try to put this as nicely as possible....
Oh , at last a reasonable , wise comment.

dear Lucky Lady - hope you really are - , the fishy thing appear when there is no mention at all to the hedge requirement in the FAQ , or in the TOS or in the hedge page in their website.

then the dealer control the hedge orders when s/he want to accept hedge position he can accept it at only %60 of the margin level , and when s/he don`t want to accept the order then s/he simply cancel it even if you was have exactly %100 in your margin level.

note : ( want and don`t want ) depend on the many things , but the most important concept in such company is that the company work against you , mean when you sell you sell for them and when you buy you buy from them, mean they are not connected to any real market / bank , and this is lead us to the famous concept for the scam fraud such companies:

IF YOU WIN/PROFIT THEY LOSE AND WHEN YOU LOSE THEY WIN/PROFIT.

did you know now where is the fishy thing about this hedge requirement trick?
  • #13
  • Feb 3, 2010 11:36am Feb 3, 2010 11:36am
You think this is a scam broker? That's fine, it happens . But what makes you think that they will expose this to you on a demo? Scammers are on what they are because they are more stupid than the other people (it's usually the opposite )
  • #14
  • Feb 3, 2010 12:11pm Feb 3, 2010 12:11pm
Quoting maheswara
500 bucks capital
crosses pair
1 lot initial position
doesnt know broker margin rule
using hedging like it ll help

you could learn forex with 500 bucks , but this is not the way friend
this is not demo and Im sure of that ...

get broker that can accept micro or nano or watever smallest possible unit they give... that way u ll get the best out of the 500 bux ... u ll lose it eventually might as well lose while learning something ...

http://www.forexfactory.com/showthread.php?t=3156
  • #15
  • Feb 3, 2010 12:23pm Feb 3, 2010 12:23pm
my bad then , thought it was live account...
anyway u shld understand no retail brokers do 100% orders , they hedge about 50% of their customers position and bank on the fact that most of them lose in the end
a real bank spot has a minimum of 1 million usd per order , making it hard for any small retail trader , that is how retail broker comes to our help , gather many small orders and average them into one big order so that they can be hedged to another place , they also act as a semi bucket shop by not hedging consistent losers ...
To Live is the rarest thing in the world , Most people exist , that is all
  • #16
  • Feb 3, 2010 12:33pm Feb 3, 2010 12:33pm
Quoting siko
You think this is a scam broker? That's fine, it happens . But what makes you think that they will expose this to you on a demo? Scammers are on what they are because they are more stupid than the other people (it's usually the opposite )
I understand your example about stupid ppl , and i`ll explain some thing for you so you don`t consider any of us from them

i make this example on a demo account just let you know what exactly i`m asking for.

now about how the scammer will expose him self , well
they wont .

and for your known you will never be able to proof that any hedge order have been canceled by the dealer or by you.

unless there is new info i don`t know about it.
  • #17
  • Feb 4, 2010 12:41am Feb 4, 2010 12:41am
Any one might have new knowledge about this question?

please help me to gather more and more info about this situation.
  • #18
  • Feb 4, 2010 3:09am Feb 4, 2010 3:09am
if you want to hedge order, you must think from first order that do you have enough margin level, its mean some broker have different rule about margin hedge, you can find broker with full margin hedge or 100% margin can be used.

when you use that broker you will have calculation for single type as general broker but will different when you open hedge order.

and check your lot for 500$, lot 1 ?

i think if you use 0.05 you will think free for hedge and with low risk but high gain.

you can learn from this statement http://tinyurl.com/ycoygwj

check how they take a profit, how they have a risk.

with lower lot you can get higher profit , you need to use demo account and learn about risk.
  • #19
  • Edited 3:47am Feb 4, 2010 3:24am | Edited 3:47am
Quoting zx10
After some replies i have to announce that this is a demo account not real , and i`m asking it to gather some knowledge about the bro kers fake rules.

so thank you very much for all the advices i got , and the sympathy you resent.

but please answer me for my questions , because it might be a big support for me to catch a big fishy broker in this market.
I am really happy for you that it wasn't a real account.
Trust me, I have had to fight against hedging/unhedging in the past, blowing two real accounts while trying to prove that it was possible to recover such a situation.

Now in the case of one of my own brokers (the other one doesn't allow hedging): FxPro used to allow hedge below the 100% level at the start when they eliminated the margin requirement for the second position. However, after a few months they required the margin level to be at least 100% for this.
I took hedging trades in both situations (before the change and after the change).

On the other hand (and I tested it directly on real and demo), the margin level will get to the levels they clearly mention in their actual Terms and Conditions PDF Document, Section "Orders - Instructions", Nš 6.11 paragraph:
Quote
6.11 At Margin level less than 10% the Company has a discretionary right to begin closing positions starting from most unprofitable. If Margin level is equal or less than 5%, all positions are automatically closed at market price.
. You can read the document here.

(A side note on this: in my case and on both accounts blown, positions started being closed from the less unprofitable - possibly because the opposite would have immediately margin called the account?) Smallest amount left on the account after margin call was $0.32 (at leverage 1:500). About $4,35 on the previous one with leverage 1:200.

See "Margin Level Required To Open Lock Or Hedge Positions", in Execution Rules section on their site, near the bottom of the page here.

I made a comparison here on three different brokers some time ago.
Hope it helps.
  • #20
  • Feb 4, 2010 4:03am Feb 4, 2010 4:03am
Quoting zx10
unless there is new info i don`t know about it.
Why don't you ask them directly through the Live Support Online? I think that should be the fastest and easiest way to get an accurate response about the exact levels they require as well as if they also would require additional margin to "hedge" the open position, so you can calculate or plan accordingly.


Notes:

From LiteForex's FAQ on their site:

"2.25 What are “Margin Call” and “Stop Out”?

http://www.liteforex.org/images/top_arrow.gif

The company has a right to close customer’s positions without notifying him, in case equity is less than 20% of the required margin (for opened positions). If several positions are opened, the company can close one or several of them, starting from the one, generating the largest loss. The trade account condition is controlled by the server, which closes all positions automatically, if margin level reaches 10% (or less) for “Lite” accounts. This situation is called “Stop Out”. It is performed by the current market price. For real accounts the values are 50% and 20%."

Thus it appears similar to the above example, only that there will be a little more money left on the account after it's stopped out.

There seems to be no mention of their hedging policies in that document though, neither in their Service Agreement.
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