Using Forex Margin

As mentioned earlier, all online forex trading system using margin. If using the margin in vain, it will speed up the bankruptcy. You have to be realistic. Manage risk wisely using margin.

Suppose you have a standard account with leverage 1:100. You open a buy position of 1 lot EURUSD price 1.2748. Means the margin used is $1274.80. This is the overall margin 12.75% and. This figure is obtained and 1274,80/10,000.

When the price drops to 100 pips, then any loss experienced is 100 x $10 = $1,000. Remember 1 pips on a standard account's value is $10.

Now let's do the simulations, how whenever we open a buy position up to 5 price lot at 1.2748. Means the margin used is 5 x $1274.80 = $6,374. This is a 5 x 12.75% = 63.75% and overall margin.

When the price drops up to 100 pips, then any loss experienced is 5 x 100 x $10 = $5,000. Means you suffer loss half and capital.

If the price drops to 200 pips, then you have been hit by a margin call. Whereas fluctuating foreign exchange 100 points to 200 points in a day was very often the case. And as a result you will more quickly broke when too daring to use margin.

Compare for example when you use the margin just 12.75%. When the price fell to 200 pips then your loss is $2000. Only 20% and capital. If the price continues to fall, it turns out that You will be hit by a margin call if it reaches 1000 points down. Not safe enough.

The bottom line is the more you use the margin, i.e. open a lot more, there is a huge profit opportunities. But the simultaneous risks more quickly went bankrupt. Therefore many traders who lose money because of the indiscriminate use of margin.

Many traders who are determined to use the huge margin caused by greedy nature. Sometimes traders noticed that his position was being a loss, so he tried to add positions in the hope will be able to recoup the advance. This often causes the trader even faster bankrupt because margin used.

With a small margin of course benefit only small. Unlike large margins, profits can be more. However, there are of course risks. Use the margins too much seems to me like an egg on the tip of the Horn. Just wait for the day bad luck befalls it. If you have always been hockey, please use a huge margin. But if you feel as an ordinary man who could shit, wiser to use a small margin.

The important questions are:

How much is the maximum margin should be used?

We are trading right should only a maximum of as much as 5% and total margin. Smaller and 5% makin good. If you are using capital may not be too much, the tolerance margin can be used you can zoom in up to 10%. As time goes by, you may have a capital gain, minimize the margin can be used into a 5% return.

My advice is you should not be too mindful of the digits Margin, Free Margin, and especially the existing Margin Level in the Terminal window (Trade). Normally even be misleading Margin level is usually the number is big, so psikológi we feel safe, but not necessarily. You need to pay attention to only one, namely how the maximum number of lots that you should open.