high leverage = margin call first, try ask support for confirmation

This post has been edited by jong52yuara: Feb 11 2009, 02:58 PM

No, you are not wrong. That is how it works. However, the actual margin requirements may vary with each type of account/broker and on MT4, you can query exactly what that is by using the MarketInfo function call.

This post has been edited by howszat: Feb 11 2009, 03:05 PM

Why somebody said wrong?

No, just agreeing with you. I've added more details but you were too quick.

Demo or virtual trade is different than real money trade.

Demo, you can simply "tembak" with high/super leverage, then if loss, never mind also, demo or virtual only mah, nothing to lose.

But in real money trade, you can't afford to simply "tembak" as you need to pay for your losses!

So it is no suprise to see some demo account to gain significantly, because people won't show the significant loss one.
Demo account or virtual trade normally you will have either significant loss or significant gain because the reason as mentioned. It doesn't represent how real trade will be. Because in real trade, you have more human factor in it especially emotional part. In demo, you are more emotional because no real $$ involved, but in real trade, it is different, any movement involved $$ in stake.

Still demo or virtual trade is a good start practising point, but it is short of one important element that dictate human decision making ie. $$.

Just my 2 cents.

http://www.babypips.com/school/leverage_defined.html

read through this to understand leverage. it provides very good explanation on how leverage works with examples

Actually i know how the leverage works but how you going to explain my example i had shown above?

Hmmm, maybe they try to get money from you so 1:400 is like discount they give. Its risky so better don't go to that zone.

that proves that u didnt read the website that i have given you. higher leverage requires u to "safe deposit" a smaller amount of your capital with your broker. 1:400 requires i think 0.25% compared to 1:200 which requires 0.5% so if ur leveraged 1:400 .. a $1000 position requires u to keep 0.25% of that position with your broker... if you are on 1:200 they require u to keep 0.5% with your broker..

Did you mean they attract me using 1:400 to open more trades so that if i loss, i can loss much?

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Added on February 11, 2009, 10:27 pmSo if percentage more like 1:200 with 0.5% mean the risk more high right? If my answer still wrong again, i'm not quite understand what you explain on the above, can you give me a more simple example? Sorry!

This post has been edited by rstusa: Feb 11 2009, 10:27 PM

Its not I dont want to explain to you BUT I DONT do spoonfeeding. Read the website and read the entire lesson on leverage (its only like 4 pages and so little words) I have provided and if you still dont understand after reading I will explain. You will get a better picture by reading the website as they provide graphics and also examples using charts. Their example is VERY simple as they give real scenarios for you to understand.

This post has been edited by kelvin_tan: Feb 11 2009, 10:39 PM

The person you are asking doesn't appear to know, that's why you were getting responses that avoided the question.

In fact, you have already answered the question yourself. A higher leverage means you can open bigger lots with same margins compared to a lower leverage. In other words, for the same amount of your money you can open bigger positions. Another way of looking at it is you need less of your money to open the same position if you have a high leverage. That's the good edge of the sword.

With bigger positions (lots) potentially you stand to gain more or lose more. That's the bad edge of the sword, and hence the risk. But it's not really an issue if you understand what it means, and avoid opening bigger lots because it looks "cheap". It is the size of the lots that contribute to your winnings/loses, not the margin.

try Fxpro , leverage 1:500

Its regulated , many good rating on this broker. Using the exact same MT4 platform as IBFX

This post has been edited by sephiaric: Feb 12 2009, 04:45 AM

It really depends on the size of your positions compared to the amount of balance you have in your account, if you have $1000, with 1:400 leverage you can open a position up to $400,000, but that's just suicidal, because the market only needs to move 0.25% against you to wipe your account out, or in the normal case, 0.125% percent as brokers margin call at half your balance left.

But if you're not stupid and don't do suicidal things like above, high leverage allows you to open multiple small positions, because every position only requires 0.25% of the amount, so to open a $10,000 position, you only need $25, and because you have $1000 in your balance, you wouldn't get a margin call until you reach a $500 loss.
In this example you are really only leveraging 10 times, as it's a $10,000 position on $1000 balance.

For me a leverage up to 1:50 is enough, because if you open multiple positions that go beyond 20x leverage, it's extremely risky, if not suicidal. Unless you're scalping of course, but good luck with that.

@howzsat
Well i can only assume that its me that you are referring to that I dont know how leverage works and how to explain it. You have explained it reasonably well in your post. I just dont do spoon feeding as I have bad experience with it already. Babypips.com explains it so well that its hard for people not to understand it unless they are very weak in english.

This post has been edited by kelvin_tan: Feb 12 2009, 09:57 AM

I really scare to invest in those forex broker that are not under USA CFTC & NFA. Currently i saw CROWNFOREX with the lowest spread & FXPRO provide the highest leverage but they still got the biggest probability to become fraud. Who know in one day it will happen, just like so many ppl believe in SWISSCASH really protected by SWISS MUTUAL FUND over near 100 yrs, and now we can see what had happened to SWISSCASH. However, USA still under a stable government to control all the community that let me have a big confidence to put funds in forex broker within USA.

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Added on February 12, 2009, 10:40 amBased on what you said it looks "cheap", i think i understood what you telling. The answer is 1:400 very atrractive, then if the person can't control his/her emotion or greedy, then he will open a lot of trades with bigger positions because the leverage offer high, if leverage offer low, then the person will control properly and won't open too much of trades with big positions because he know that he is using low leverage that charge the high margin. This is all based on emotion. Correct me again if i still wrong, haha! Anyway, thanx for the explanation.

This post has been edited by rstusa: Feb 12 2009, 10:40 AM

rstusa
oanda is cftc and nfa regulated with lowest spread compared with every broker i've seen (0.7 on EU yesterday night).

This post has been edited by kelvin_tan: Feb 12 2009, 10:52 AM

Oic, i heard Oanda got the lowest spread but it is not all the times right? I heard most of the times it back to normal 3 spread and seldom on 0.7 spread.

nope.. i've seldom seen it at 3.0.. like for now its at 1.6.. only during news release time i see it at 10-15 pips..

I'm definately going to oanda after this. The spread is very low!