Canadian Margin Requirements Won't let me Scalp?

Hi Everyone,

Just getting ready to start my first live account with Oanda Canada and I've got a bit of a surprise. I normally trade with a 10-15 pip stop loss, risking 2-4% of my account equity (i know this may seem high but trust me). With $2000 in my account this makes my lot size typically 0.25 - 0.8 lots for Eur/Usd. However, due to canadian margin requirements of 5.4% I can only open 0.25 lots total at one time! This means I cant enter a trade with a stoploss smaller than 15 pips without reducing my risk to less than 2%.

What can I possibly do about this? Do I have to throw out my entire scalping strategy and start swing trading with wider stop losses? I'm really nervous all the prcatice I put in with this method will be useless.

Any help would be appreciated.

Did I actually spend an entire year practising short term trading to discover I can't do it unless I leave my country

As far as I know, there is no way around the Canadian requirements so long as you're using a Canadian FX broker. Luckily, Canadians are not restricted to using only Canadian brokers like the unfortunate yanks to the south of us. I would recommend posting what it is you need in a broker and seeking some guidance as to what type of offshore broker you should run with. There are plenty of well regulated brokers that allow much greater freedom with your funds than any Canadian broker will be able to lend you.

Cheers

I'm surprised that the account you have been practicing with doesn't have the same conditions as the live environment...

I suggest that you just keep working on your real account. There are some differences between demo and real accounts. Now that you are a success on your demo account, you need to learn to have success on your real account. Only practice, practice, practice will give you this sucess. Also, we often trade the two accounts differently. That trade that you wait for hours on you demo account will be the trade that you think should give you numerous pips in only 15 minutes on your real account. Don't worry so much about the costs and limits of trading. There is always some cost of doing business. At your age you may be a self-made millionaire by the time you are 18!

I still have an oanda canada account as a Canadian but it is now only my backup account. I had to open another account in the UK because I did not like the margin requirements with oanada canada.

So just open another account in a well regulated environment.

Thanks for your posts! I was starting to sweat.

Whew. The Oanda rep I spoke with gave me the impression I counldn't open an account outside of Canada.

From I broker I need the following:

Ability to trade 0.01 lots to 1.00 lot with only $2000 in my account
Tight spread 2-4 pips. Ideally 2 on majors
Ability to use MT4 platform
I see some brokers offer a % bonus when you sign up? This would be awesome.
Fast market order execution for scalping
No negative balance would be nice incase of order placement script bugs

As a Canadian which brokers can I use? Or can I create an account with any, regardless of where they are based? I am capable of doing my own research an understand everyone's times is valuable.

You can use any broker really. I believe that if you're with Oanda specifically, then you have to use their Canadian brokerage if you're a Canadian citizen but you can certainly pick whichever brokerage you like around the world. I would suggest that you choose a broker with good IT infrastructure, reputable regulation and one that does NOT give out a deposit bonus. Others may disagree but to me, this type of offer is a red flag and a potential indicator of a broker that may work against you.

Do some research and check around. I personally use Pepperstone, an Australian broker who is establishing a trading server in New York, co-located with their liquidity providers. They charge a commission on each trade but I see spreads typically in the 0.5-0.8 range on the EUR/USD.

Whatever the case, the globe is basically open to you in terms of which broker you can choose, just try to do so wisely.

Cheers

Scrap your Canadian broker requirement. You are likely to hit the same margin limits with any/all of them, and the few others either on MT4 or otherwise, suck in many different ways. I have demo tested Oanda Canada, and indeed with $10K on deposit, once you get to $2k worth of positions, you are 'off quotes.' Which, frankly, is criminal, certainly once you factor in anti-hedging and FIFO. Invest with one of the other reputable international or UK based brokers, and you should be able to do more with less capital in the account, if that is a concern, and perhaps even consider multiple brokers.

Just thought I'd post this for any new traders in Canada who want to trade with a 10 - 20 pip stop loss. Skip Oanda or any other Canadian broker. Here's why: After getting approved they are only allowing me to deposit $1000 in my account. So I did some math and here is what I wrote them. Hopefully this research can some someone some time in the future. It would have saved me a good couple hours.


"Does this mean I can only deposit 1K into my account? Is this a joke? Let me show you why this will not work. The pair I trade the most is EURUSD. The Canadian margin requirement for this is pair is 5.4%. Typically I will trade with a 10 pip stop loss and look for targets of 30 pips or so. To put 2% of my total account equity at risk on one of these trades would mean I need to buy 0.2 lots. So, 0.2 lots with a 10 pip stop loss equals a loss of $20. However, with a $1000 account, the largest position I can take at one time is 0.1 pips. That means I'm typically risking $10 per trade to make $20 - $30. A return of 5% per week would only be $50.

Now, when I was registering Oanda asked me "What is the maximum loss you would be willing to suffer"; to which I responded, $2000. Now this $2000 that I am willing to lose, if I risk 4% of my account equity per trade (this risk % per trade may seem high but I will explain), I will be losing $80 per trade. With this money management my account will not be empty until I have at least 25 more losers than I do winners. For the last six months I've been trading for my hit rate has been 40%. And since I typically take profit at 2R or 3R, my largest loss per trade was only $80, while my average profit per trade was around $210. My maximal drawdown was 6 consecutive losses, so allowing myself 25 losses before my account is empty is extremely cautious. This allows me to suffer a drawdown over 4 times as bad as my historical worst, and still survive.

Now, the MM I described in the paragraph above seems pretty safe. That is, allowing myself 25 more losses than winners before my accounts empty, with a hit rate of 40% and a maximal draw down of 5%. So in order to risk 4% of my $2000 per trade on EURUSD with a 10 pip stop loss, I need to buy 0.80 lots per trade. Given Canadian margin requirements, I need around $7000 in my account to be able to trade like this.

I was hoping Oanda could let me deposit $3500 into my account. While this is still significantly less that I need to be able to trade the way I want, I can "make it work" for now by mainly trading CAD pairs which have lower margin requirements (but higher spreads). If this is not possible. I will simply look for an off shore broker who does not have to comply with Canadian margin requirements. While I would prefer to deal with Oanda, I simply cannot survive trading a $1000 account under Canadian margin requirements.

Oanda emailed ma back a generic "EFF you, we didn't read your email but we aren't doing anything" email.

So In conclusion:

If you live in Canada and want to scalp with a 10 - 20 pips stop loss and risk 1-4% of you net account value, you HAVE to open an account outside Canada or deposit more money (which Oanda wont let me do).

Man, when I found out about it, I was disappointed too but I found out about it just some time before opening a live OANDA account. I too will consider opening a UK account once my current accounts up and running properly.

Just a question though, lets say someone opens an account in another country, and the country you're from doesnt allow it, can you get in any problems because of that? or is it the broker's fault for allowing you in the first place?

I don't know to be honest. I think it might be more an issue of where the broker is operating out of. If you make the deal (margin) with a broker in say Canada, then that country says "these are the requirements for all deals (margin) made here" . So as long as you have an account in a country that has realistic margin requirements you're ok, since you only have to comply to that nations standards. Thats my understanding at least.

Trying out go markets now.

Trading Point,4XP,FBS,ZeroSpreads,ThinkForex,FXCM UK,DCM Forex,TADAWULFX,FXFLAT,ACFX,FXPro,Alpari,FXOPEN,LITEForex,FBC,WindsorBrokers,AtlaseFX,FxCmpany,InstaForex,GoMarkets,VantageFx,FBSMarkets,PrimeFX,FIG FX,MasterForex,Exness,Broco,UWC,AdmiralMarkets,SynergyFX,Nano4X,InterCapitalMarkets,InvestTechFX,TradeViewForex,Forex4you.Personally I use OANDA,FXCM UK and 4XP.
You must take safety of your deposits into consideration as part of the risk.Micro account in UK is OK.

WHOA Go markets offers 500:1 leverage. I dont understand why USA and Canada have such low leverage. Unnecessary really. Only forces people to put more money into their accounts, risking even more of their hard earned money.

Excellent analysis and a perfect perspective of how the Canadian laws are marketed under the guise of 'protecting' people's investments, yet everything has become so skewed and manipulated in reverse logic, such that most people can't sift through it.

And yet 'they' only allow a certain amount to be deposited into one's trading account? What a sad joke of an institution. Run far away from this, very far. There are brokers where you can take $10k and have $8K and more work towards your positions, instead of the pathetic $2k ceiling that Oanda puts in place to supposedly protect their customer. The reality is, the odds are overwhelmingly against you, to lose.