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  • #301
  • Aug 29, 2010 4:12am Aug 29, 2010 4:12am
Excellent post Billflet!

Pipmutt I will try again, in the example $10,000 account, you would be using 5:1. 50k position divided by 10k balance. Ok, now if you take a $10,000 account even at 10:1 leverage you would need between $5,000 and $8,000 of margin to place the trade depending on the currency you're trading. And thats all you would be able to place at the same level, even if the risk to your account is 1% because you have a 20 pip stop loss you still wouldn't be able to place another trade of the same size until that one is out, so you wouldn't even need to be a trader that has multiple trades in, anybody who puts more than 1 trade in at a time even with minimal risk to their account will be affected.
  • #302
  • Aug 29, 2010 5:41am Aug 29, 2010 5:41am
Quoting luckylady

Excellent post Billflet!
At least we agree on something!

Quoting luckylady

Pipmutt I will try again
You can try as many times as you like, there's no limit, in fact if you throw enough darts you may actually hit something!

Quoting luckylady

in the example $10,000 account, you would be using 5:1.
Well my equity would be leveraged 5:1 trading USD base currency pairs (although if I remember correctly you didn't actually specify a pair in your original challenge), but carry on.....

Quoting luckylady

Ok, now if you take a $10,000 account even at 10:1 leverage you would need between $5,000 and $8,000 of margin to place the trade depending on the currency you're trading.
Not exactly accurate, I think I could trade 50k rand (ZAR) for around 700 bucks 10% margin requirement but yes generally between around $3,500 (for example NZD) to around 7 or 8k for other liquid pairs, but carry on, we're doing reasonably ok so far......

Quoting luckylady

And thats all you would be able to place at the same level, even if the risk to your account is 1% because you have a 20 pip stop loss
Ok, now you're off on a little excursion of your own! Where are you getting this 1% risk and 20 pip stop from, and what do you mean by 'same level'?

Quoting luckylady

you still wouldn't be able to place another trade of the same size until that one is out, so you wouldn't even need to be a trader that has multiple trades in, anybody who puts more than 1 trade in at a time even with minimal risk to their account will be affected.
In your earlier example I traded 50k on a 10k account with a 35 pip stop (about average for intraday) and a ~1.75% risk. If I wanted to make multiple trades on the same pair (scale/average in) then the sensible thing to do would be to simply reduce individual trade size accordingly otherwise I'm just increasing exposure and risk. The same applies if I wanted to trade multiple pairs at the same time, overall I wouldn't want more than a couple of percent exposure in the same market anyway.


Wanna have another shot at it? Or how about describing one of your trades where you need 100:1 leverage, that might be helpful.
  • #303
  • Aug 29, 2010 6:24am Aug 29, 2010 6:24am
Quoting pipmutt
Well my equity would be leveraged 5:1 trading USD base currency pairs (although if I remember correctly you didn't actually specify a pair in your original challenge), but carry on.....
No, the way you are working out how much someone is leveraged at the moment, is position size divided by account size so it doesn't matter which currency you're trading its the same position size.
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Not exactly accurate, I think I could trade 50k rand (ZAR) for around 700 bucks 10% margin requirement but yes generally between around $3,500 (for example...
You could trade USD/ZAR but being it also has USD as the base currency in the pair, it would be the same margin requirement as any other USD/xxx pair (except at the moment exotics have 4 times the margin requirement of other pairs whether that will change at the same time hasn't been mentioned yet).

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Ok, now you're off on a little excursion of your own! Where are you getting this 1% risk and 20 pip stop from, and what do you mean by 'same level'?
I would think it was obvious this was meant as an example, that even if you're a relatively conservative trader, who takes a 1% risk per trade it can still impact you if you want more than 1 trade running at a time, same level (same lot size as the other trade).
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In your earlier example I traded 50k on a 10k account with a 35 pip stop (about average for intraday) and a ~1.75% risk. If I wanted to make multiple trades on the same pair (scale/average in) then the sensible thing to do would be to simply reduce individual trade size accordingly otherwise I'm just increasing exposure and risk. The same applies if I wanted to trade multiple pairs at the same time, overall I wouldn't want more than a couple of percent exposure in the same market anyway.
I wouldn't want to place multiple trades on 1 pair, but I do watch 3 different currencies and know good traders that watch even more. If they see a good setup they will put a trade in on another pair that they watch. You have no idea when a good setup is going to appear, you might already have another trade in, you might not. The point is, at the moment, they can take that trade after this they probably wouldn't be able to. I never said at any point that I use 100:1 leverage on any one trade. What I said was, it will affect how a lot of people trade, not just reckless gamblers as you've put it.
  • #304
  • Aug 29, 2010 6:57am Aug 29, 2010 6:57am
Quoting luckylady

No, the way you are working out how much someone is leveraged at the moment, is position size divided by account size so it doesn't matter which currency you're trading its the same position size.
lol I'm not the one who's working it out like that, that would be you!

Quoting luckylady

so it doesn't matter which currency you're trading its the same position size.
Do you seriously believe that your 10k USD account is leveraged the same trading for example 50k units GBP/USD as it is trading 50k units USD/JPY?

Quoting luckylady

You could trade USD/ZAR but being it also has USD as the base currency in the pair, it would be the same margin requirement as any other USD/xxx pair
Obviously, but how about ZAR/JPY?

Quoting luckylady

it can still impact you if you want more than 1 trade running at a time, same level (same lot size as the other trade).
And you'd want to do that why exactly? Can't you see that all you'd be doing is doubling exposure and risk?


Quoting luckylady

I wouldn't want to place multiple trades on 1 pair, but I do watch 3 different currencies and know good traders that watch even more. If they see a good setup they will put a trade in on another pair that they watch. You have no idea when a good setup is going to appear, you might already have another trade in, you might not. The point is, at the moment, they can take that trade after this they probably wouldn't be able to.
You kind of missed the point, read my post again and learn about risk, market exposure, and diversification. Or don't....

Quoting luckylady

I never said at any point that I use 100:1 leverage on any one trade. What I said was, it will affect how a lot of people trade, not just reckless gamblers as you've put it.
Ok, so what leverage do you use, why not give an example of one of your trades? Like I've said to others, percentages will do, no-one's interested in your personal finances.
  • #305
  • Aug 29, 2010 7:51am Aug 29, 2010 7:51am
Quoting pipmutt
lol I'm not the one who's working it out like that, that would be you!
Good grief do you actually read anything, please tell me the calculation you did in this conversation with The Fool when you came to the conclusion he is leveraged 20:1.
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I trade at 0.2% of account per pip on a 5-pip sl for a 1% risk - that's as aggressive as I go.
Quoting pipmutt
Get the party hats out, finally we got somewhere! http://cdn.forexfactory.com/images/s.../yim/party.gif

In that case you're 'only' leveraged 20:1, the transition down to 10:1 shouldn't be that devastating for you if/when it comes!
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Do you seriously believe that your 10k USD account is leveraged the same trading for example 50k units GBP/USD as it is trading 50k units USD/JPY?
uh no, that would be you, see the conversation with The Fool above.

Quote
Obviously, but how about ZAR/JPY?
Yes you're right, lets get all newcomers to jump into an exotic currency just for the fun of seeing how long they last, that'll be fun.
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And you'd want to do that why exactly? Can't you see that all you'd be doing is doubling exposure and risk?
Well I suppose you're right there, perhaps you'd better quickly tell all those senior traders on this forum they'd better not place more than one trade at any one time.

Quote
You kind of missed the point, read my post again and learn about risk, market exposure, and diversification. Or don't....
But this was my point, you have insisted that only reckless gamblers would need that sort of leverage.


Quote
Ok, so what leverage do you use, why not give an example of one of your trades? Like I've said to others, percentages will do, no-one's interested in your personal finances.
You tell me how much leverage I use: 3% risk per trade, 20 pip stop loss.
  • #306
  • Aug 29, 2010 8:58am Aug 29, 2010 8:58am
If I can find a system that works with a higher leverage I will use it. This is because I don't have much working capital to begin with. Neither does it entail throwing my money into the wind or, make me any less serious about trading than the next person. It simply means I don't have much money to work with.

Of course like a lot of other folks, I'm not sure how much I'm actually leveraging? Just recently I opened a GoMarkets account (yeah, overseas) with leveraging set at 100:1 I believe? and an initial deposit of $100 (i.e., trial account). Initially it was set to $.10 per pip (standard account?), and I requested they change it to $.01 per pip or, a penny per pip (or mini account), which they did.

Currently I'm trading .05 lots at a nickel per pip and I am quite comfortable with this. Now, can somebody please explain how much I'm actually leveraging, and what difference it would make, if any, if leverage was set to 10:1 as opposed to 100:1?

Thanks!
  • #307
  • Aug 29, 2010 10:32am Aug 29, 2010 10:32am
EC

To find your real-leverage simply divide your position size by the amount in your account. For instance:

Position size = $500 and account size =$100
Divide $500 by $100. Your real-leverage is 5:1

Position size=$100 and account size = $100
Divide $100 by $100. Your real leverage is 1:1

Margin-based leverage is the maximum your broker allows. 100:1 in your case at gomarkets. Most brokers will allow you to voluntarily reduce that amount.
  • #308
  • Aug 29, 2010 11:57am Aug 29, 2010 11:57am
Quoting billflet
EC

To find your real-leverage simply divide your position size by the amount in your account. For instance:

Position size = $500 and account size =$100
Divide $500 by $100. Your real-leverage is 5:1

Position size=$100 and account size = $100
Divide $100 by $100. Your real leverage is 1:1

Margin-based leverage is the maximum your broker allows. 100:1 in your case at gomarkets. Most brokers will allow you to voluntarily reduce that amount.
ok bill, I must assume what you say is correct, you are, after all, a guy on the internet.

So, when I trade at my most aggressive stance at 2 std lots from my $10,000 account, 1% account risk, 5 pip sl, that's 0.2% per pip, my "real-leverage" is 20:1. OK, fine, you and pipmutt are on the same page.

But why do I care? I would not be able to make that trade with said risk if I did not have margin set at 50:1. The available margin is what matters to me. The available margin is what (potentially) is being regulated. If there is a distinction between "margin-based" leverage and "true-leverage" - why do I care?

I'm just trying to scratch out my pips at a known, controlled level of risk. I'm on top of that, all wonky hair-splitting aside.
"If The Fool persists in his Folly he will become wise." - William Blake
  • #309
  • Aug 29, 2010 11:59am Aug 29, 2010 11:59am
wow, talk about argument and counter arguments.
Enter Signature
  • #310
  • Aug 29, 2010 12:10pm Aug 29, 2010 12:10pm
Quoting luckylady

Good grief do you actually read anything, please tell me the calculation you did in this conversation with The Fool when you came to the conclusion he is leveraged 20:1.
Well it's not exactly rocket science, he gave all the necessary information to enable the calculation - "5-pip sl for a 1% risk"

Quoting luckylady
Yes you're right, lets get all newcomers to jump into an exotic currency just for the fun of seeing how long they last, that'll be fun.
Doh, we were talking about my margin requirements on a 50k trade which you said would be between $5k - $8k, I was simply pointing out that as you hadn't actually specified a pair in fact it could be as low as ~$700 (ZAR) but generally between $3,500 (ie NZD) and $8k trading other liquid pairs. Does any of this ring any bells or register with you at all?

Quoting luckylady
Well I suppose you're right there, perhaps you'd better quickly tell all those senior traders on this forum they'd better not place more than one trade at any one time.
Where did I say that, they can place as many trades as they like! You said "it can still impact you if you want more than 1 trade running at a time, same level (same lot size as the other trade)." and I asked why you'd want to do that when all it means is you're doubling your exposure and risk. Presumably 'senior traders' would have worked out their risk limits in advance, planned their trade beforehand, and divided their total exposure proportionately if they intended to have multiple entries.

Quoting luckylady
But this was my point, you have insisted that only reckless gamblers would need that sort of leverage.
Yeah I wasn't specifically talking about leverage in that reply, I was talking about exposure in one market. Read up on the subject sometime, it's quite interesting.

Quoting luckylady
You tell me how much leverage I use: 3% risk per trade, 20 pip stop loss.
Sure, if you're unable to work it out for yourself I'm happy to help, 15:1


You know you'd be better off asking questions and educating yourself before trying to be a smart arse, that would be the sensible thing to do!
  • #311
  • Aug 29, 2010 12:25pm Aug 29, 2010 12:25pm
Quoting The Fool

I would not be able to make that trade with said risk if I did not have margin set at 50:1.
Serious question, what's the total percentage of your account that you've set as risk capital? ie what's the maximum drawdown you would tolerate over a series of trades?

It's not a loaded question to try and catch you out or something, I'm genuinely interested!
  • #312
  • Aug 29, 2010 12:58pm Aug 29, 2010 12:58pm
Quoting pipmutt
Serious question, what's the total percentage of your account that you've set as risk capital? ie what's the maximum drawdown you would tolerate over a series of trades?

It's not a loaded question to try and catch you out or something, I'm genuinely interested!
Good question. I don't have a good answer.

Heretofore in my fx trading "career" everything I have put up to trade is money I assume will be lost, and can afford to lose. I consider it tuition still, more or less. I am beyond the runaway trade/margin call phase, but I still have losing streaks. These have all been overcome lately, but that might not be the case at some point.

If I were trading for a living, at what DD would I stop trading? Stop for how long? Stop and do what - go get a job? What if I were trading OPM, something I might like to do - what max DD might I advise an investor his deposit might risk? He can set up his account to close his trades if there is a DD threshold crossed - what should that be?

The best I can say right now is that I will bail on a trading session if I hit a DD of >3%. If I am down >8-10% I will take days, maybe a week off.
"If The Fool persists in his Folly he will become wise." - William Blake
  • #313
  • Aug 29, 2010 1:06pm Aug 29, 2010 1:06pm
Quoting pipmutt
Well it's not exactly rocket science, he gave all the necessary information to enable the calculation - "5-pip sl for a 1% risk"


Doh, we were talking about my margin requirements on a 50k trade which you said would be between $5k - $8k, I was simply pointing out that as you hadn't actually specified a pair in fact it could be as low as ~$700 (ZAR) but generally between $3,500 (ie NZD) and $8k trading other liquid pairs. Does any of this ring any bells or register with you at all?



Where did I say that, they can place as...
I give up pipmutt, you are by far the smartest person in here, you don't need educating in anything whatsoever and everyone should bow at your feet, I get it. I wasn't actually trying to be a smart arse, I couldn't possibly compete with you on that score.

Far, far better traders than you have assured me that their accounts and income will be impacted by this and they will have to find a way round it to keep their income on the same level its been for years, but carry on thinking what you like, they must be all be gamblers not traders.
Quote
Presumably 'senior traders' would have worked out their risk limits in advance, planned their trade beforehand, and divided their total exposure proportionately if they intended to have multiple entries.
Thats right, yes they have and no some of them won't be able to trade as they were because of the new margin requirements, but of course all is right with the world because you will still be able to so why should they worry about it.
  • #314
  • Aug 29, 2010 1:11pm Aug 29, 2010 1:11pm
Quoting luckylady

You tell me how much leverage I use: 3% risk per trade, 20 pip stop loss.
Quoting pipmutt

Sure, if you're unable to work it out for yourself I'm happy to help, 15:1
Now, you REALLY got me interested. I am really keen to know HOW did you get 15:1 from 3% risk per trade and 20 pip stop-loss when Billflet just showed that the real leverage is based on trade size and account size whereas margin-based leverage is what the broker is offering which is what the government is trying to regulate. And this is what I thought what leverage is.

But you are somehow able to calculate a leverage rate just from risk % and stop loss? I would really like to learn. And as you have always wanted to give a helping hand. Please give a helping hand.
Make your losses in demo. Earn your profits live.
  • #315
  • Aug 29, 2010 1:16pm Aug 29, 2010 1:16pm
Quoting luckylady
I give up pipmutt, you are by far the smartest person in here, you don't need educating in anything whatsoever and everyone should bow at your feet, I get it. I wasn't actually trying to be a smart arse, I couldn't possibly compete with you on that score.

Far, far better traders than you have assured me that their accounts and income will be impacted by this and they will have to find a way round it to keep their income on the same level its been for years, but carry on thinking what you like, they must be all be gamblers not traders.Thats right,...
Aww, luckylady, you don't want to miss the opportunity to be educated by Prof. Pipmutt. After all, you don't want to be a "reckless gambler" and lose all your money.

Good posts, btw!
Make your losses in demo. Earn your profits live.
  • #316
  • Aug 29, 2010 1:20pm Aug 29, 2010 1:20pm
Quoting The Fool

The best I can say right now is that I will bail on a trading session if I hit a DD of >3%. If I am down >8-10% I will take days, maybe a week off.
Ok thanks, I was just thinking how much excess free margin you'd need to comfortably cover those losing streaks and how much of a gap there would be for traders if/when this leverage limit is introduced.

FWIW I think you've set some sensible limits there, 1%, 3%, and 10% (at 10% maybe just monitor a few trades to make sure everything still works)
  • #317
  • Aug 29, 2010 1:24pm Aug 29, 2010 1:24pm
Quoting Forexia
Aww, luckylady, you don't want to miss the opportunity to be educated by Prof. Pipmutt. After all, you don't want to be a "reckless gambler" and lose all your money.

Good posts, btw!
lol, classic dumb and dumber!

When you guys fail at trading you've got a great career as a comedy double act!
  • #318
  • Aug 29, 2010 1:34pm Aug 29, 2010 1:34pm
Quoting pipmutt
lol, classic dumb and dumber!
Ok now you are clearly launching personal attacks. We have tolerated you enough for two days for your iunnudos, sarcasisms, purposeful quoting out of context and misquoting just for winning arguments for fun.

This has gone too far. I don't mind debating with you on issues but I can't do with someone who post these kind of comments.
Make your losses in demo. Earn your profits live.
  • #319
  • Aug 29, 2010 1:41pm Aug 29, 2010 1:41pm
Quoting Forexia

But you are somehow able to calculate a leverage rate just from risk % and stop loss? I would really like to learn. And as you have always wanted to give a helping hand. Please give a helping hand.
Well seeing as you asked so nicely and there's no hint of any sarcasm.....!

I've got to be careful how I explain this because you two masterminds are sharp dudes!


If you take your risk %, lets say 1% of $10,000, that's $100, with me so far?

Now divide that dollar amount, $100, by your stop loss, let's say your stop is 20 pips, the result is $5. So that's equivalent to $5 per pip, yes?

$5 per pip would mean a trade size, in dollars, equivalent to $50,000 and voila......5:1

Your account doesn't need to be in dollars though, the same calculation would apply to accounts in any denomination.

Wiser now?
  • #320
  • Aug 29, 2010 1:45pm Aug 29, 2010 1:45pm
Quoting Forexia

Ok now you are clearly launching personal attacks.
lol, it's not a personal attack at all, it's my opinion based on the fact that luckylady posted some pretty inaccurate and stupid comments and you say 'good posts', I mean what other conclusion could anyone reach other than dumb and dumber? Clever and cleverer? Hardly, all evidence to the contrary.

By the way my posts aren't compulsory reading! Knowing how much you value your right to choose, your democratic right is in the ignore option!
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