Hello, I recently got an account at FXCM micro and decided to test the waters. I have the following questions(my account is in USD btw): The 1K micro lots is it 1k in the base currency pair or always 1,000 dollar equivalent of the base currency? For example, let's say I have $1,000 deposited and I decided to buy 1 micro lot of CHF/JPY do I buy 1 thousand dollars worth of swiss francs or 1 thousand swiss francs? If I trade CHF/JPY does the USD/CHF rate play a role in margin call calculations(all losses or gains need to be converted back to dollars anyway)? Thanks in advance.
if your asking this you should pull your money out of that account.. and open a demo or open oanda account for smaller then 1k lots
A better thing for you is to quit while you're ahead. Forex is not to be traded, ever. It's for people with much bigger pockets than your pittance $1000. No offense. If you'd like to see how bad forex traders are, and how much you can lose, please see collective2.com. Losing $10,000, which is all $1000 and owing $9000 is not out of the question, so if you're willing to risk that, by all means...
Neither of replies has been particularly useful. I don't need patronizing. The brokers specifications are vague on purpose. From what I read by myself you need a specific number per 1K lot regardless of base currency So I guess 2.50 is required for 1K lot of either swiss francs, euros or GBP. I don't need advice on blowing money, I did not risk $1,000 I risked $25 in a micro lot account just to get some experience doing the real thing. And forex is not going to be something I will trade in a significant fashion for quite some time. And btw, I already learned enough not to use all available leverage. I am going to be sticking with 50:1 and not 400:1, 200:1 or 100:1.
if you buy usd/jpy for example you're buying dollars and selling yens at the same time, if your buying cad/jpy for example, then your dollars are converted into Canadian dollars, and when the trade is closed, the cad dollars are converted back into usd dollars.
This response is misguided. You cannot have unlimited downside risk in Forex, which is what it seems you are trying to say. Downside risk is only limited to the cash within the account. The brokers won't let you trade if you don't have enough to put up in margin. I know quite a few people who do quite well in Forex.
If you trade CHF/JPY, the contract size is in CHF(base currency) e.g. 1000CHF for a "microlot". P/L will be in JPY(quote currency).
I have a site where I sell an FX course for $179. I've been shocked at how good of a business it is, there are a ton of people interested in it. The course is very good, basic T/A stuff, explains the markets etc. I make a lot of amount of money on it, but the truth is if anyone close to me wanted to trade Forex is the last market I would send them towards. I never mention the product here or anyplace else and simply sell it via clickbank affiliates and it flies off the shelf. There are a lot of people who don't have enough money to trade who still think they should give it a try. DONT TRADE FOREX...this coming from a guy who could potentially make a profit if you do.
Thanks to those who provided helpful info. Forex is a brutal market, I have always believed it as such. That is why I am learning it after trading stocks/options/futures. The biggest problem I have with Forex is the 24hr cycle. Currency can move way more in 24 hours (not percentage wise but just territory wise) than a stock in 6 1/2. So the tempo is different. As to leverage, it did not take me long to realize that 50:1 is the most I will ever use in forex. There is no risk to me when I play around with $25 in micro lots. My favorite instrument is still the stock option.
Why buy some regergitated second-rate garbage when better information (and more!) is available absolutely free from sites like babypips, plus there is plenty of help from people on forums like this one. Save your money people, don't feed these scamming sharks!