1
- #2
- Nov 16, 2008 9:55am Nov 16, 2008 9:55am
- Joined May 2005 | Status: Trader | 1,494 Posts
There are many out there that cannot grasp this concept. Maybe you can make it clear to them 
Good Luck....
Good Luck....
In trading, there is no bullshit. You either make money or you don't.
- #5
- Jul 13, 2011 3:47am Jul 13, 2011 3:47am
- Joined Sep 2006 | Status: Oh yeahhh :) | 1,409 Posts
Not sure if this is what most people do. If my trading account is $100,000 , then I keep $85,000 at my local bank account, which is relatively safe. Put the remaining $15,000 with the broker.
High leveraged broker helps as it means you have to deposit less with them. If the account grows then take proportional money back into your home bank account. If you lose money trading then top it up with the money from your home bank account. Safer than leaving the entire $100,000 with the broker.
This is of course assuming low risk per trade, less than...
Everything is correct. What is your question?
Don't trust brokers too much, even the most honest and most reliable ones. Give them only money you are ready to lose.
Many things can happen... and your founds will be blocked. Do you want this?
P.s Don't put all eggs in one basket.
Good luck
Josef
- #7
- Last Post: Jul 13, 2011 10:17pm Jul 13, 2011 10:17pm
- | Joined Sep 2010 | Status: Hey, Them PiPs were mine! | 21 Posts
So for a 100 pip stop loss, my position size is 5 lots. So from a 100:1 broker I need a $5000 margin.
Balance minus Required margin = free margin. Required Margin being the cost of buying the 5 lots. So if you are buying 5 lots in the EUR/USD pair, your account deposit was in USD, and the current price is @ 1.452350, then it would cost $7,117.50 plus the spread just to open your position.
Then you need to include the risk value or cost. In your case the $5,000
If you add those two together you get $12,117.50 + the spread cost. If you deposited that amount and your broker gave you a margin call at 100% of the cost of required margin, you wouldn't need a stop loss because you would get a margin call and the broker would close your position at 100 PiPs anyway. That may or may not be okay based on your trading style. It's Not mine. I would just a soon NOT tell my broker "Hey look at me I only have a few PiPs to a Margin Call". But that's just me
So you can't deposit $5,000 and make it work.
By the way "Sometimes the higher leverage the higher loss. Leverages control people who cannot control themselves."
- If you can't control yourself - DON'T TRADE
- Leverage DOES NOT control people who cannot control themselves. 100/1 leverage buying 1 lot with a 50 PiP stop is exactly the same 50/1 Leverage buying 2 lots with a 50 PiP stop. We both risk and lose the same amount!
- Leverage * lots purchased * PiP value * Stop Loss = Risk. I can RISK the exact same amount at 50/1 as you do at 500/1 if we have the same stop. I only have to INVEST MORE.
- Also, I can MAKE the exact same amount as you can with a 500/1 account in a 50/1 account. Again, I just have to INVEST more. The only possible increase in risk may be that I have more on deposit with my broker at 50/1 than you do with yours at 100/1. So if my broker pukes I'll lose more. On the other hand, my brokers is less likely to go upside down because they have twice the liquidity as a 100/1 broker (I.e. twice as much on deposit)
In regards to your larger question, the only other thing I would add to the equation is how long it takes to deposit funds. If I need to deposit funds I would like to have a couple of days worth of "Buffer" with my broker since sometimes it takes up to 2 days for my deposit to show up. I wouldn't want to be held up from being able to follow my money management strategy just because I was waiting for a deposit.
Outside of that I see NO reason to leave additional funds with any broker. Put it in a savings account!