Let me try to explain in the form of an example. I used a spreadsheet to model the movement.

Let's say you have USD1000 as your collateral, ie this is the amount of money you have sitting inside the bank.

And you bought the pair USDEUR with the objective that the USD will strengthen vs the EUR. This is called a LONG, so you are doing a LONG USDEUR, or some private banks call it Buy USD / Sell EUR.

Your Entry Level was USDEUR = 0.90, using today's interbank rate.

You leveraged up to an amount of 100000 USDs.

What happens is : if the pair USDEUR drops by 1%, you will trigger a Margin Call. What is this 1% ?

In your case of your Entry Level being at USDEUR = 0.90, a 1% drop will be this pair dropping to USDEUR = 0.89.

Hence, the lower your leveraging amount is, the lower the pair can drop before you approach a Margin Call event.

If,... on the other hand, you did a SHORT of the USDEUR instead, the above situations would 'reverse',...

Let us know for more questions,....

Don't understand,...

Ok,.. appreciated your clarification,...

Using your example, IF the USDEUR gaps down to 0.89 at open on a Monday, AND you have n SL in-place,... then your position will close-out immediately, hence, you will lose all of your collateral.

Your position will be zeroised (assuming you have no other open positions), and you can't initiate another new position without installing another collteral.

In the forex world,... you need to :-

1) have good analysis of the downside risks.

2) trade up to 80% of your margin only.

3) have a logical Stop-Loss in-place.

The lower your marginning in 2) above, the further you can place your SL in 3) above for the curve to 'turn back up'. It's not right to place your SL too close to your EL (Entry Level). YOU will get stopped-out due to mkt knee-jerk reactions, especially in today's environment.

JMHO - in my private banking 'excitements',... I'm not really a currency trader.

Please treat my comments with caution and not be induced to place trades,... in line with MAS requirements,...

Right,...

1) In the early days, when the Euro was first introduced, the Euro was weaker than the USD. Hence, we used USDEUR. Today,... the Euro has super-seeded the USD,.. hence, it is more approriate to use EURUSD.

2) I think he meant 0.01 as the gap,... not the forex rate,...

By the way, bros,... learn to take profits too,... in my private banking 'games', I have two levels on every trade - SL and TP. No need to sit in front of the screen always,...

For myself,.. I love the AUDJPY pair,.. can earn a differential interest,...

I do options programs, bro,.. with Strikes, Premiums and Knock-Outs,...

Your acct can never go into deficit,... their margin team will ensure that.

Tq,... I feel that 2% is too near to the entry level, and can hit the stop-loss easily. But it depends on the trade too - hence, we must know the downside risks well, AND have a LOGICAL stop-loss in-place. But this is Direct Forex Trading, which I don't do much,...

When I say depends on the trade,.. a trade means, though not limited to, the lot size, the pip-counts, the pair concerned, the recent fundamental events surrounding the pair traded, and the study of the charts, also known as the TA for the pair under analysis.

Have been viewing the updates here,... truly informative,.. thank you.

Would like to ask : any opinions abt the audjpy pair, moving forward ?

What is tf pls ?

Tq bro,...

Emm,.. say in the next 12 months ?

I use the monthly to help me on deciding where the entry and exit points are,... but I use fundamentals more than techs...

For these three currencies, I can't see any long positions that I dare to take with them as the primary currency,... not at least in the next few months,....

The Carry Trade looks to be diminishing,...

If the BOJ suddenly introduces more stimulus, then,....

I burnt RM800k recently by cutting loss in my AUDJPY pair,....

Oddly,... I don't feel that bad abt it !!!

That's a positive way to look at it !

Well,... at least we have 'sportsmanship' - if loses, then pay up !

I read in an article last month that many American private banking clients litigated against their private banks when they lost money, claiming that their pb rms did not explain all the risks to them. But for us/me,... we just cutloss and take the loss gracefully,...



I held the pair for so many years,... bros,... and it keeps falling,....

But,.......bros,...........I'm noticing that the AUD is TURNING AROUND !!! AM I RIGHT ??!!??

Opinions pls ??

I looked at 3-year charts, 200 ma, AUDJPY and AUDMYR... the signal is turning around,... am I right ?? Anybody starting to go long on the AUD now ??? Good money leh,....

Yes,... I heard abt the 2008 disaster,... all my fellow pb clients/friends had their AUDJPY positions cut when they came back from one major festival holiday,... All lost everything from their assets inside the pb account !

Expecting carry trade to unwind further,... what would your prediction be for the AUDJPY in the next 12 months ?

With the Feds on a downward bias,... wouldn't a short on the USDJPY be logical ?

Were you trying to top-up your margin strength, ie responding to a margin call notification from your banker when you tried to swipe your UOB Credit Card ?

Appreciated your charting details,.... my rm related to me a few weeks back that 70 is the strongest floor ever for this pair ! But having observed the plunge in the last few months,... and that Kuroda fella not willing to signal any further stimulus from the BOJ, I decided to cutloss. Cut with two positions - 74.(something) and then 72.(something)...can't remember,....

When I first bought these pairs in 2013 and 2015,.... it was upward movement ALL THE WAY. PERHAPS I SHOULD HAVE CUTLOSS EARLIER,..

No revenge trade, bro,... not taking it too personally,..

...not like someone stole my world-class, trophy girlfriend from me,... just dough here only-lar,...

Bros,... when I chk look back at the AUDJPY Charts that span all the way back to the AFC in 1998, I noticed that the AUD will run back up very fast when times improved,....

So,... the question here : will the AUD do the same again this time,... and will the JPY keep its weakened position again this time being just a safe haven currency during bad times ?