@sleepwalker
care to explain to me why 0.01 lot would cost me USD28 to buy? or are you saying you require a minimum of USD28 to buy 0.01 lot ? Please be precise in your explanation as it is very misleading the way you put it.
And oanda you can even buy 1 unit which is 0.0001 USD per pip.. there is no specific lot sizes in oanda.

Why ppl said 1:200 leverage higher risk than 1:50? For 1:200, we'll only spend smaller margin which is $0.50 for 0.01 lot and 1:50 is $2.00. It was very obvious that 1:50 is higher risk. IBFX offer up to 1:400, so every time i spend 0.01 lot just $0.25, if those leverage like 1:100 or 1:50 will spend more margin on your trading.

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Added on August 20, 2009, 10:00 am

Alpari UK need you to certified true copy for your documents from a notary, bank manager or commissioner for oath, the process fees only RM8, just find one of them will do.

Oanda Margin requirement is different from brokers like FXCM.
Oanda actually calculate the margin based on the value of the currecncy you re buying instead of applying fixed margin for all currency pair like FXCM.

If you buy 1 standard lot of EU @1.42 using FXCM at leverage of 1:400, you only require margin of 250 (100,000/400). But if you buy the same lot using Oanda , the margin required is  355 (100,000 *1.42 /400) assuming Oanda also offer the same leverage of 1:400.
If you buy 1 standard lot UY using FXCM , the margin is still 250 but Oanda is only 235 (100,000 *0.94/400) which is lower than FXCM margin requirement.

So to all who is new to Oanda, please calculate your margin requirement before opening trade because you might end up getting margin call if your account balance is insufficient.

Never Let a Winner Turn Into a Loser

Repeat after us: Protect your profits. Protect your profits. Protect your profits.


There is nothing worse than watching your trade be up 30 points one minute, only to see it completely reverse a short while later and take out your stop 40 points lower. If you haven't already experienced this feeling firsthand, consider yourself lucky - it's a woe most traders face more often than you can imagine and is a perfect example of poor money management. The FX markets can move fast, with gains turning into losses in a matter of minutes therefore making it critical to properly manage your capital. One of our cardinal rules of trading is to protect your profits - even if it means banking only 15 pips at a time. To some, 15 pips may seem like chump change; but if you take 10 trades, 15 pips at a time, that adds up to a respectable 150 points of profits. Sure, this approach may seem as if we are trading like penny-pinching grandmothers, but the main point of trading is to minimize your losses and, along with that, to make money as often as possible.


The bottom line is that this is your money. Even if it is money that you are willing to lose, commonly referred to as risk capital, you need to look at it as "you versus the market". Like a soldier on the battlefield, you need to protect yourself first and foremost. There are two easy ways to never let a winner turn into a loser. The first method is to trail your stop. The second is a derivative of the first, which is to trade more than one lot.


Trailing stops requires work but is probably one of the best ways to lock in profits. The key to trailing stops is to set a near-term profit target. For example, if your "near-term target" is 15 pips, then as soon as you are 15 pips in the money, move your stop to breakeven. If it moves lower and takes out your stop, that is fine, since you can consider your trade a scratch and you end up with no profits or losses. If it moves higher, by each 5-pip increment, you boost up your stop from breakeven by 5 pips, slowly cashing in gains. Just imagine it like a blackjack game, where every time you take in $100, you move $25 to your "do not touch" pile. The second method of locking in gains involves trading more than one lot. If you trade two lots, for example, you can have two separate profit targets. The first target would be placed at a more conservative level that is closer to your entry price, say 15 or 20 pips, while the second lot is much further away through which you are looking to bank a much larger reward-to-risk ratio. Once the first target level is reached, you would move your stop to breakeven, which in essence embodies our first rule: "Never let a winner turn into a loser."


Of course, 15 pips is hardly a rule written in stone. How much profit you bank and by how much you trail the stop is dependent upon your trading style and the time frame in which you choose to trade. Longer-term traders may want to use a wider first target such as 50 or 100 pips , while shorter-term traders may prefer to use the 15-pip target. Managing each individual trade is always more art than science. However, trading in general still requires putting your money at risk, so we encourage you to think in terms of protecting profits first and swinging for the fences second. Successful trading is simply the art of accumulating more winners than stops.

Logic Wins, Impulse Kills

More money has been lost by trading impulsively than by any other means. Ask a novice why he went long on a currency pair and you will frequently hear the answer, "'Cause it's gone down enough - so it's bound to bounce." We always roll our eyes at that type of response because it is not based on reason - it's nothing more than wishful thinking. We never cease to be amazed how hard-boiled, highly intelligent, ruthless business people behave in Las Vegas. Men and women who would never pay even one dollar more than the negotiated price for any product in their business will think nothing of losing $10,000 in 10 minutes on a roulette wheel. The glitz, the noise of the pits and the excitement of the crowd turn these sober, rational business people into wild-eyed gamblers.


The currency market, with its round-the-clock flashing quotes, constant stream of news and the most liberal leverage in the financial world tends to have the same impact on novice traders. Trading impulsively is simply gambling. It can be a huge rush when the trader is on a winning streak, but just one bad loss can make the trader give all of the profits and trading capital back to the market. Just like every Vegas story ends in heartbreak, so does every tale of impulse trading. In trading, logic wins and impulse kills. This maxim isn't true because logical trading is always more precise than impulsive trading. In fact, the opposite is frequently the case. Impulsive traders can go on stunningly accurate winning streaks, while traders using logical setups can be mired in a string of losses. Reason always trumps impulse because logically focused traders will know how to limit their losses, while impulsive traders are never more than one trade away from total bankruptcy.


Let's take a look at how each trader may operate in the market. Trader A is an impulsive trader. He "feels" price action and responds accordingly. Now imagine that prices in the EUR/USD move sharply higher. The impulsive trader "feels" that they have gone too far and decides to short the pair. The pair rallies higher and the trader is convinced, now more than ever, that it is overbought and sells more EUR/USD, building onto the current short position. Prices stall, but do not retrace. The impulsive trader who is certain that they are very near the top decides to triple up his position and watches in horror as the pair spikes higher, forcing a margin call on his account. A few hours later, the EUR/USD does top out and collapses, causing trader A to pound his fists in fury as he watches the pair sell off without him. He was right on the direction but picked a top impulsively - not logically.


On the other hand, trader B uses both technical and fundamental analysis to calibrate his risk and to time his entries. He also thinks that the EUR/USD is overvalued but instead of prematurely picking a turn at will, he waits patiently for a clear technical signal - like a red candle on an upper Bollinger band or a move in RSI below the 70 level - before he initiates the trade. Furthermore, trader B uses the swing high of the move as his logical stop to precisely quantify his risk. He is also smart enough to size his position so that he does not lose more than 2% of his account should the trade fail. Even if he is wrong like trader A, the logical, methodical approach of trader B preserves his capital, so that he may trade another day, while the reckless, impulsive actions of trader A lead to a margin call liquidation. The point is that trends in the FX market can last for a very long time, so even though picking the very top in the EUR/USD may bring bragging rights, the risk of being premature may outweigh the warm feeling that comes with gloating. Instead, there is nothing wrong with waiting for a reversal signal to reveal itself first before initiating the trade. You may have missed the very top, but profiting from up to 80% of the move is good enough in our book. Although many novice traders may find impulsive trading to be far more exciting, seasoned pros know that logical trading is what puts bread on the table.

Never Risk More Than 2% Per Trade

This is the most common and yet also the most violated rule in trading and goes a long way towards explaining why most traders lose money. Trading books are littered with stories of traders losing one, two, even five years' worth of profits in a single trade gone terribly wrong. This is the primary reason why the 2% stop-loss rule can never be violated. No matter how certain the trader may be about a particular outcome, the market, as John Maynard Keynes used to say, "can stay irrational far longer that you can remain solvent." Most traders begin their trading career, whether consciously or subconsciously, by visualizing "The Big One" - the one trade that will make them millions and allow them to retire young and live carefree for the rest of their lives.


In FX, this fantasy is further reinforced by the folklore of the markets. Who can forget the time that George Soros "broke the Bank of England" by shorting the pound and walked away with a cool $1 billion profit in a single day? But the cold hard truth of the markets is that instead of winning the "Big One", most traders fall victim to a single catastrophic loss that knocks them out of the game forever. Large losses, as the following table demonstrates are extremely difficult to overcome.


Amount of Equity Loss              Amount of Return Necessary to Restore to Original

          25%                                          33%
          50%                                          100%
          75%                                          400%
          90%                                          1000%


Just imagine that you started trading with $1,000 and lost 50%, or $500. It now takes a 100% gain, or a profit of $500, to bring you back to breakeven. A loss of 75% of your equity demands a 400% return - an almost impossible feat - just to bring your account back to its initial level. Getting into this kind of trouble as a trader means that, most likely, you have reached the point of no return and are at risk for blowing your account. The best way to avoid such fate is to never suffer a large loss. That is why the 2% rule is so important in trading. Losing only 2% per trade means that you would have to sustain 10 consecutive losing trades in a row to lose 20% of your account. Even if you sustained 20 consecutive losses - and you would have to trade extraordinarily badly to hit such a long losing streak - the total drawdown would still leave you with 60% of your capital intact. While that is certainly not a pleasant position to find yourself in, it means that you only need to earn 80% to get back to breakeven - a tough goal but far better than the 400% target for the trader who lost 75% of his capital. The art of trading is not about winning as much as it is about not losing. By controlling your losses - much like a business that contains its costs - you can withstand the tough market environments and will be ready and able to take advantage of profitable opportunities once they appear. That's why the 2% rule is the one of the most important rules of trading.

I've never seen any broker setting fixed margin. Purchasing 1.0 standard lot of 1.42 EU will cost a margin of 355 as you have shown using Oanda. FXCM will be the same. Imagine the amount of money they are losing if they allow you to purchase a USD355 lot for USD250. I think you are getting a little confused on this.

FXCM Micro that i am using is fixed margin. 1 mini lot of EU at 1.42xx is USD25 margin.
I have just opened 1 trade and that is what shown on my Trading Platform.

Yeap. You are definitely confused here. If you trade on leverage, then you use ratios like 400:1, 200:1. What you are trading in your FXCM account is trading on margin, which is expressed as a percentage of position size.

You cannot compare trading with margin and trading with leverage.

Yeap. You are definitely confused here. If you trade on leverage, then you use ratios like 400:1, 200:1. What you are trading in your FXCM account is trading on margin, which is expressed as a percentage of position size.

You cannot compare trading with margin and trading with leverage.

theres no point talking how much actually your account traded on the market, because it still need to divide the amount by the leverage.

1:200 leverage can control 200k if you deposit 1k, and when calculating the profit still need to divide by 200 again.

you are confusing people ~_~

margin trading = leverage

The most basic definition of margin as it refers to securities trading is the ability to buy stock or another security without having the actual cash on hand to pay for it.

@sleepwalker
the word PAYING IS SO MISLEADING LA ! please dont tell me i havent read up on what leverage is. I have been trading for a little more than a year. From what i deceipher from ur chat. Every 0.01 lot that i buy i have to pay USD 28...

this is your exact words
"With a leverage of 1:50, each lot size (1.0 lot) is then divided by 50 which equals to USD2,800. Since you are buying a 0.01 lot size, you are paying USD28 per 0.01 lot."

You are seriously misleading others to believe that every 0.01 lot size purchased u need to pay USD28. I am not bashing or anything but read it from a newcomers point of view as there has been quite a number of new faces in the forum recently.

No I'm not confusing anybody. They are the same meaning, trading with money you don't have. However, the calculation is different between trading with leverage (ratio) and trading with margin (percentage).

Don't give me the shit as though I don't know what trading with leverage and margin is.

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Added on August 21, 2009, 9:18 am
THERE IS NO WORD PLAYING HERE. This is how a standard lot size is calculated at 100k units of currency. Please don't get confused with mini accounts and micro account and nano accounts. They trade at different currency size.

My example, if you were reading properly, said standard lot size, meaning 100K. It's sad that after 1 year of trading that you do not know what a standard lot size is. People, esp newbies who does not bother to learn about the basics will get confused with mini and micros accounts

Heck, some mini accounts are set to trade at 10K currency, so a mini lot of 1.0 with a leverage of 1:200 will cost USD70 and a 0.1 lot will cost USD7. Of course then your 1.0 mini lot pip is only USD1.

So tell me exactly which part of my exact words that you quoted that is wrong? I'm not responsible for people getting confused with other accounts. People who understands the fundamentals and basic would know what I'm talking about.