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How much capital is needed?

  • #1
  • First Post: Jan 4, 2016 9:31pm Jan 4, 2016 9:31pm
Hello,

So I have been trading nothing but Binary options and now I am getting into Forex. I am currently using FXCM demo account but I have a few questions that I was wondering if this community could help me answer.

1. What exactly is margin call and how is it used? I've seen the 1:1, 25:1, 50:1 and all in between. What is the best one to use?

2. From my understanding, if you have a small account balance and your trade goes too far in the hole, it auto sells it, how exactly does this work?

3. My end goal is to have an account balance to have a trade up to -35 pips max without auto settling. What kind of balance and leverage do I need to accomplish this?


Sorry for the "Rookie talk" and thanks in advanced!
  • #2
  • Jan 6, 2016 3:50pm Jan 6, 2016 3:50pm
  •  Zinot
  • | Joined Dec 2015 | Status: VUIP - Very UnImportant Person | 138 Posts
http://www.babypips.com/

you will find the answers to this and all the other questions you will be struggeling around in the next weeks there... have fun!

btw: this was my 100th post at FF
Insanity: doing the same over and over again & expecting different results!
  • #3
  • Jan 6, 2016 4:58pm Jan 6, 2016 4:58pm
As a general rule the higher the leverage the better, try to find a broker that offers 1:100 or more...1:50 could be a pain in the ass if you're scalping or using a high risk strategy...Regarding -35 pips question, this could be accomplished with any kind of balance, it's just a ratio that you can always calculate ( divide your balance by the pip value of the contract you opened to know how many pips your account can withstand before the margin call and leave some space for the margin as it will consume part of your balance once a live trade has been executed)..You can start trading as little as 10 dollars (offered by some brokers) but I don't recommend trading with anything less than 200-300 dollars though. Make sure to visit Babypips as Zinot mentioned to learn about contract sizes and leverage...etc. It will take you no more than a few hours to learn everything you need to know about leverage, margin/ margin calls and contract sizes..Regards
Simplicity is the key to brilliance.
  • #4
  • Jan 6, 2016 5:22pm Jan 6, 2016 5:22pm
Go to Oanda, open a small live trading account with 10 bucks and play around with 10-20 units per trade.
You willl almost certainly lose these 10 dollars, but you will not lose several hundred as with other brokers with larger minimum investment and trade size.
k
  • #5
  • Jan 6, 2016 5:46pm Jan 6, 2016 5:46pm
it depends on your goal ,go with oanda
focus while relaxed to see better
  • #6
  • Jan 6, 2016 7:44pm Jan 6, 2016 7:44pm
Quoting blake12377
Hello, So I have been trading nothing but Binary options and now I am getting into Forex. I am currently using FXCM demo account but I have a few questions that I was wondering if this community could help me answer. 1. What exactly is margin call and how is it used? I've seen the 1:1, 25:1, 50:1 and all in between. What is the best one to use? 2. From my understanding, if you have a small account balance and your trade goes too far in the hole, it auto sells it, how exactly does this work? 3. My end goal is to have an account balance to have a...
the question is how much have you got to lose?
never trade with monies that you are not prepared to lose.
  • #7
  • Jan 7, 2016 6:56pm Jan 7, 2016 6:56pm
Quoting blake12377
Hello, So I have been trading nothing but Binary options and now I am getting into Forex. I am currently using FXCM demo account but I have a few questions that I was wondering if this community could help me answer. 1. What exactly is margin call and how is it used? I've seen the 1:1, 25:1, 50:1 and all in between. What is the best one to use? 2. From my understanding, if you have a small account balance and your trade goes too far in the hole, it auto sells it, how exactly does this work? 3. My end goal is to have an account balance to have a...
I will get straight to the point and answer your primary question.

What you want to do is have a trade which can go in red 35 pips without margin call.
Simply look at a broker which offers you say 500:1 leverage.
If your leverage is 500:1 and you use your entire balance (100%) with that leverage, then your max stop loss or what you call auto settling, or what we call "margin call" would be 20 pips.
Now using the same 500:1 leverage and this time you use (50%) if your balance, then your max stop loss would then be doubled from 20 pips to 40 pips.
So all in all if you use 500:1 leverage and 10% of your total balance then your highest stop loss would be 200 pips.

The thing that people tend to ignore is HIGH leverage, or any leverage which is higher then anything lower, simply gives you the ability to open the same position size (say 1.00 lot size) but for less money compared to lower leverage. That of course allows you to use bigger lot sizes, and that is where people get into problems.
Just because you "the information" doesn't mean you have knownledge.
  • #8
  • Jan 8, 2016 8:51am Jan 8, 2016 8:51am
Quoting blake12377
Hello, So I have been trading nothing but Binary options and now I am getting into Forex. I am currently using FXCM demo account but I have a few questions that I was wondering if this community could help me answer. 1. What exactly is margin call and how is it used? I've seen the 1:1, 25:1, 50:1 and all in between. What is the best one to use? 2. From my understanding, if you have a small account balance and your trade goes too far in the hole, it auto sells it, how exactly does this work? 3. My end goal is to have an account balance to have a...
Margin calls are different on different brokers, I have 50/20% on my HF premium it means that when required margin drops to 50% you get margin call and to 20% its automatically closed. Regarding 3 point you need to calculate required margin for your lot size using information about leverage, for example with 1:400 leverage and 1 lot position you need 250 required margin to support it
  • #9
  • Jan 9, 2016 2:29am Jan 9, 2016 2:29am
Leverage can be a friend and enemy during times of market volatility.Many brokers leverage upto 1000.It depends on how much you have to lose in the trade.You set your leverage accordingly.You can try different leverages in demo account and you will understand it in a more better way.
  • #10
  • Jan 10, 2016 10:34pm Jan 10, 2016 10:34pm
my friend told me that im already can do forex trading without spend money, because sometime many broker that have a no deposit promotion, im just take advantage about it to make can do forex trading, so i can learn about it while have a chance to make profit with no risk.
  • #11
  • Jan 10, 2016 11:32pm Jan 10, 2016 11:32pm
Each one have their own statement for profit and loss. This proves that the financial success for one may be nothing for the other. This is purely subjective and as the golden rule says never invest the money that which you cannot afford to lose holds good for all the traders irrespective of their financial status.
  • #12
  • Jan 12, 2016 10:35am Jan 12, 2016 10:35am
I recommend you 2 things:

1. Stop trading binary options, it's a scam.

2. Try read the basics in Babypips
  • #13
  • Last Post: Jan 19, 2016 12:30am Jan 19, 2016 12:30am
for trading capital, it depends on the individual trader. But for a newbie would better trading with small capital first or trading with no deposit. because the conditions of real accounts and demo accounts is very different
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