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Chapter 34, Part I. A Bit More About Leverage. Page 8

Discussion in 'Complete Trading Education- Forex Military School' started by Sive Morten, Dec 28, 2013.

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  1. Sive Morten

    Sive Morten Special Consultant to the FPA

    Aug 28, 2009
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    Commander in Pips: Yes, you can, since your broker allows you to trade mini accounts and your account balance will be sufficient to continue trading. You will not be able to trade when your total equity will be equal minimum margin at minimumal lot size. For instance, this broker allows you to trade no less than 0.1 lot with 100:1 margin. Hence, you will not be able to trade when your total equity will reach…

    Pipruit: $100?

    Commander in Pips: Yep.

    Pipruit: Still, sir, I do not understand clearly. For example, the broker could close just part of my position and leave the rest opened. Why it has closed it totally?
    Commander in Pips: Well, this is just an example. How it will be in reality depends on each particular broker and its rules of management client’s positions. You have to study trading rules of any particular broker. Also, if you have some different lots in different currencies, the broker could close one or few positions and leave some others open. This is a bit personal and depends, as we’ve said from broker.

    So, let’s make some conclusions:

    1. Total Equity = Account balance +/– Profit/Loss on opened positions (flow profit loss)

    When no opened positions hold Total Equity = Account Balance

    2. Used Margin = Number of lots opened x margin per lot = position value x percent margin;

    3. Usable Margin = Total Equity – Used margin, hence:

    - No margin call if Total Equity>Used margin

    - Margin call if Total Equity<= Used margin

    Pipruit: Yes, I remember that.​
    #1 Sive Morten, Dec 28, 2013
    Lasted edited by : Oct 9, 2016
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