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  • Help me understand forex.

    So couple months ago i traded on a live account with $200.The leverage was 1:100 and 5 times i was kicked out of the trades.My question is why i was kicked out.I know it wasn't the broker because it just $200, if i was them i wouldn't wasted my time on me but on the big fishes.Now this is how i traded.I sell the eur/usd by opening 2 lots at the same time and when the market was going against me i got kicked out.I still had $67 after i got kicked out and then the market moved in my favor but it was too late.Also one more question, what's the difference from balance/equity and margin/free margin? Thanks in advance for helping out.

  • #2
    Re: Help me understand forex.

    Originally posted by gavros777
    So couple months ago i traded on a live account with $200.The leverage was 1:100 and 5 times i was kicked out of the trades.My question is why i was kicked out.I know it wasn't the broker because it just $200, if i was them i wouldn't wasted my time on me but on the big fishes.Now this is how i traded.I sell the eur/usd by opening 2 lots at the same time and when the market was going against me i got kicked out.I still had $67 after i got kicked out and then the market moved in my favor but it was too late.Also one more question, what's the difference from balance/equity and margin/free margin? Thanks in advance for helping out.
    Don't enter 2 lots with only 200$ balance... go with mini or micro lots

    Barbara

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    • #3
      Re: Help me understand forex.

      I remember my first time after I see that post I understand why %90 newbeis lose money

      to be honest I am a newbie and I will do same think I have 250 € I will put it on forex market than lose around 50 €

      I study forex day & night for about 2 month , I opened and go deep down 0 in many demo account.
      now I open a new demo account with 3000 and I trade seriously this is the 10th day and I made +850€ ...

      mini account first. USE 0.01 lot ... WIN %80 TRADE THAN PASS 0.02 LOT .... MAKE A PLAN FOR ONE YEAR AND YOU WILL BE RICH BEFORE YOU DEAD ))

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      • #4
        Re: Help me understand forex.

        Don't enter 2 lots with only 200$ balance... go with mini or micro lots

        Barbara[/quote]
        Thanks Barbara, do you know by the way the difference from balance/equity and margin/free margin?

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        • #5
          Re: Help me understand forex.

          Originally posted by gavros777
          Thanks Barbara, do you know by the way the difference from balance/equity and margin/free margin?
          Balance/ equity is your deposit/ available amount... and margin :"> maybe this

          "Margin is deposit required to open or maintain a position. Margin can be either "free" or "used". Used margin is that amount which is being used to maintain an open position, whereas free margin is the amount available to open new positions. With a $1,000 margin balance in your account and a 1% margin requirement to open a position, you can buy or sell a position worth up to a notional $100,000. This allows a trader to leverage his account by up to 100 times or a leverage ratio of 100:1. If a trader's account falls below the minimum amount required to maintain an open position, he will receive a "margin call" requiring him to either add more money into his or her account or to close the open position. Most brokers will automatically close a trade when the margin balance falls below the amount required to keep it open. The amount required to maintain an open position is dependent on the broker and could be 50% of the original margin required to open the trade."

          Barbara

          p.s. so the difference would be AMOUNT that you DEPOSIT/AMOUNT that you HAVE now (or you think you have ) and AMOUNT you need FOR TRANSACTION/ AMOUNT that you can spend FOR NEXT TRANSACTION .... oh I hope you can understand

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          • #6
            Re: Help me understand forex.

            I still confusing with Mini Account, Mini Lot-Size.

            Is mini account same like MIni Lot-size ?

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            • #7
              Re: Help me understand forex.

              Originally posted by marvellin
              I still confusing with Mini Account, Mini Lot-Size.

              Is mini account same like MIni Lot-size ?

              No... MINI account is account that you take from broker, so when you come to them to open a account you can open STANDARD or MINI, STANDARD is for people with larger amount of money and bigger experience, and mini is for smaller balance and good for newbies... and then with MINI account you get the option to trade with MINI lots (that you don't have on STANDARD account)...
              It's very very good if you are starting with forex to pick broker that can give you MINI account (or even MICRO) ... good luck

              Barbara

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              • #8
                Re: Help me understand forex.

                learn some money management skills, plenty material about to learn from- should've sorted this out before going live, don't be impatient to go live it will kill you, get a money managemnt plan together & practice it before going live. with $200 scale down, work out 1-3% of account risk depending on preference and then work out the amount of pips to cover the volatility range and stop loss needed and your risk/reward ratio depending on your trading methods/strategy/timeframe - if you want a stop of 30 pips - and trade 3% risk of $200 - that's $6 - you fit those 30 pips into the $6 risk - divide up your mini/micro lots depending on the value of each pip per lot for that particular currency. bottomline
                - you've got to learn and then know what your doing by practice, how the price action and market works and how to manage your trades- there's a tendency here to get this indicator or that 'system' and hope it makes you money on the quick without knowing the why - question is if you repeatedly blow up your accounts and you can't figure out and reflect by yourself what's going wrong - do you ever think you can make any money?, think like a disciplined professional, take the long view - get some genuine forex education, take a look at the forexmentor products for a start - solid stuff, and above all get responsible for yourself - think it through yourself and when you can do that you'll improve - i'd genuinely wish you luck, but luck is no substitute for the above. all the best.

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                • #9
                  Re: Help me understand forex.

                  I think that doent have nothing to Understand,everyday is unique like the devil says hahaha

                  Comment


                  • #10
                    Re: Help me understand forex.

                    You must multiply your lot value per pip x your pips in stops to determine your risk. You should not be trading a mini lot until at least $1000, using a 50 pip stop, that makes 5% risk.

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                    • #11
                      Re: Help me understand forex.

                      most beginners overtrade...patience..small risk to start...good luck.

                      Comment


                      • #12
                        Re: Help me understand forex.

                        if I were you, I will not open 2 lots for any of my position if my balance is $200.
                        if you're going to risk 50 pips & going to risk 2% of your balance.
                        Then the appropriate amount is = ($200 x 2%) / 50 = $0.08 per tick
                        So, you have to place 8 nano lot. CMIWW.

                        Originally posted by gavros777
                        I sell the eur/usd by opening 2 lots at the same time and when the market was going against me i got kicked out.

                        Comment


                        • #13
                          Re: Help me understand forex.

                          Yeah, definitely looks like your risk to reward ratio was too high and you got caught with a margin call. When you get a margin call in FX, most brokers will automatically liquidate any open positions and you're done. Just google "risk to reward ratio" or "position sizing" to figure out how the best trade size. With $200, you're also a bit undercapitalized.

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                          • #14
                            Re: Help me understand forex.

                            Well your issue is over-leveraging. This is the single most dangerous thing why people fail in trading. Follow these steps

                            1. Have a strategy (don't buy/sell randomly unless you can justify yourself the reasoning behind taking any trades)
                            2. Set a target profit and stop loss. As per your stop loss, calculate 1-2% of your account equity and your position sizing should be done accordingly to enter the trade. (Refer to JNANG post for calculating your position size)
                            3. If you are confused about leveraging/counting $ & pip value/position sizing in FOREX then DON"T TRADE UNLESS YOU UNDERSTAND IT THOROUGHLY

                            Comment


                            • #15
                              Re: Help me understand forex.

                              Developing your own style is the single most important part of forex trading. Than depending on it you should pick your leverage. Stops are very important as well, there is a big difference between scalping with 5 sl on e/j or 45 sl on aud/nzd and swing trading a huge position, find a style you are comfortable with and master it and than move on to another style.

                              Comment

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