Margin level percentage 500% safe or not ?

Discussion in 'Risk Management' started by atawil, Oct 13, 2017.

  1. atawil



    lets say i have a 25 dollar account i want to trade for every 5 dollars 0.01 tick size which gives allows me to trade 0.05 lot size for the whole account without putting stop loss what so ever since the account is small it bearable risk the losing i m trading currencies

    what do you think of this strategy is it safe or i am wrong here i have done it before it and i made up to 250 dollars from 20 usd account however lately its not working was i lucky before is this strategy too risky or shall i try again

    i have high wining trades percentage but due to me not putting stop loss im rarley close losing position type and thats why im losing recently but i always feel since the account is small its not worth any ideas would be appreciated
  2. Xela


    I don't quite understand what you're asking (and I suspect from the lack of replies that others don't, either).

    I looked through your first few posts to see if they might orientate me, and I'm guessing that you're asking about a high-leverage spot forex trading account. Would that be right? (I hope you're not still using the nasty Cyprus-regulated one, if it is right: that would be very unwise).

    Are you asking whether it's safe to trade 1 micro-lot of forex for every $5 in your account? If you are, the answer's a big, clear, round "no".

    Do you understand the difference between "margin" and "leverage"?

    I suggest that you have a look through the education pages at a site like Investopedia, for example. The terms that will help to orientate you, I suspect, are "lot-size", "position-size", "leverage" and "margin".

    Apologies for sounding critical (if I do) but you haven't described a "strategy": you've described position-sizing method, and a dangerous one - especially trading without stop-losses.

    You need to read a couple of beginners' trading books, and trade on a demo account, to start with, IMO.

    A specific mistake to avoid is trading without stop-losses, using a method that gives a high win-rate: this is a guaranteed eventual route to the poor-house.

    For what it's worth, I'd strongly advise you not to fund a real-money trading account until you've had a minimum of 6 months' practice and carefully collated and analyzed the results of a minimum of 300 consecutive trades without making an overall loss.

    What you're describing sounds to me like gambling rather than trading.

    Sorry not to be any more helpful than that.
    Last edited: Oct 13, 2017
    HobbyTrading, Truth_ and Overnight like this.
  3. atawil


    hi Xela

    thanks for your reply

    on the contrary that was helpful sometimes you need reorganizations for your thoughts you just did that to me.

    I do understand the difference between leverage and margin and thanks for correcting the terms i used

    I'm trading a with that high leverage accounts 1:888 its FCA ASIC and CYPRUS regulated but if you can enlighten me more about them if you have info it will be much appreciated
    I like their use of high leverage accounts because its suits my micro deposits( maybe I'm wrong here too)

    maybe my question should be like what considered the least safety margin level when i open a trade i want my margin level to more than 1000% 2000% ? according to that il change my deposits and lot size i just want an account that can handle market bumps
    because for any business to be successful it needs to survive during bad times

    any suggestion and advices would be much appreciated
    Last edited: Oct 13, 2017
  4. Generally high leverage is unwise. The only exception that I can think of is for a very experienced traders with years of successful trading. Even that is questionable since someone like that will be trading large positions where such leverage would once again be unwise.
  5. d08


    High leverage is beneficial when trading very low volatility instruments and/or using proper diversification. It's not meant for anything else. But since this is about high leverage forex, I doubt you'd listen to advice...
    JackRab likes this.
  6. atawil


    the benefits of small accounts that you can afford to lose and u can experiment with them and try to learn from your mistakes and tweaks them its better than demo account for me but each peson has his own conditions
  7. atawil


    what do you mean by very low volatility instruments and using proper diversification?
    i mean can you give me an example ?
  8. d08


    Proper diversification means using uncorrelated instruments and being both long and short in them. Example: long ES, short AUD, long furs in the Inner Mongolian market.

    Low volatility instruments would be anything in the developed world or bonds. So if you're long OMX Stockholm and short Norwegian OBX, that's a very safe position even if the positions are big.
    777 likes this.
  9. atawil


    thank you for the info
  10. True, but assuming you tweak your strategy to be successful you will want to increase your position size. I guess what I am saying is this. Don't trap yourself into a strategy that requires big leverage.
    #10     Oct 13, 2017
    atawil likes this.