Forexmospherian
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I do not understand your math here. You say that you are exposing 1% of your capital at 100:1 leverage. I think that you are incorrectly calculating your exposure. If you place a trade using 1% of your capital using 100:1 leverage with an account size of $70,000, that means you used $700. $700 * 100 (100:1 leverage) gives you $70,000 of buying power for that trade. The GBP/USD is at 1.4076. you could buy £49,730 or a 49.73K lot size. That is £4.97 per pip or $7.00 per pip. If you have a 10 pip stop, then you risk losing $70.
Your real exposure for this trade is $70,000. If you have three simultaneous trades just like this one, that is an exposure of $210,000. That is an exposure rate of 300%.
If you are placing 1.5% of your capital at a time in the market with 100:1 leverage you have absolutely no advantage over somebody who is using $105,000 without any leverage or somebody with $70,000 using 1.5:1 leverage exposing 100% of their capital. The main difference between them and you is that they will not be required to use such tight stops. Why use leverage if you are not truly increasing your buying power. You are using 100:1 leverage but you are only increasing your buying power by 50%.
($70,000 * 0.0015 = $1,050 * 100 (100:1 leverage) = $105,000 buying power. $105,000/$70,000 = 1.5 = 50% increase.
Indeed, but I will wait until you have finished explaining everything else.
10 pip margins = 1.4076+0.0010. 1.4086/1.4076 = 1.00071. 61-87% of your trades are profitable. 1.00071ˆ87 = 1.0637 and 1.00071ˆ13 = 1.00926. 1.0637/1.00926 = 1.0539. 5 trading days per week. Your best case scenario is 5.39% in two weeks.
10 pip margins = 1.4076+0.0010. 1.4086/1.4076 = 1.00071. 61-87% of your trades are profitable. 1.00071ˆ61 = 1.0442 and 1.00071ˆ39 = 1.028. 1.0442/1.028 = 1.0539. 5 trading days per week. You make about 1.5% in two weeks.
Morning hhiusa
With all due respect hhiusa - I do think you are a clever guy - BUT you have either been advised badly or just not understood so many point regarding leverage and money management.
First question - Have you read the Investopedia link I had posted on Forex leverage ?
Second point . - my capital account is this particular case is approx $70k of cash - ie that's the proper amount as deposited from myself. Now on leverage of 100:1 - the brokers demands I have at least 1% always there - otherwise a margin call
1% is just $700 so I have $69300 of capital to play with and at a leverage of 100:1 then I can have trades exposing myself to actually $6,930,000
Whether you work out just $210k or even $2.1 million or whatever amount over $70k -= ALL I CAN LOSE IN THE VERY WORSE SCENARIO is my CAPITAL DEPOSIT OF $70K - NOT $210K OR $2.1 MILLION - OR EVEN $6,930,000
That's the main point of Negative Balance Protection
Please tell me you now understand this part ?
Now next point - I have been trading for over 13 years and even before negative balance protection which is relatively new - I was placing scalp trades on at 1 lot or $100,000 even with proper capital as low as $3000 .
On my $70k account - as 3 lot trade is nothing - I could place even a 50 lot trade
My capital is $70k and so exposing myself to a $300k - 3 lots trade is only using leverage of just over 4 and under 5.
I know you are not with this and furthermore - the idea of me making just 1.5% profit gain in a week or 2 is just a joke - I have done approx 8% in 3 days just off the GU this week alone
You are definitely getting your calculations mixed up - so please read the Investopedia link on the double edge of leverage
If you are a newbie or not experienced - you no way want 200 -400:1 leverage - but if you are using the 1 or 2% rule on stake of your capital - then really with you knowing your stop size - you are not exposing yourself then to massive leverage - and if your broker offers then negative protection - you only can ever lose you capital - and no more
I know there are many other points to clarify - but we must make sure you understand this part first
Regards
F