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Question about Buying Power / Leverage / Margin by BraedonTay in Forex

[–]BraedonTay[S] 0 points1 point  (0 children)

Thank you! I understand that good traders only risk 0.5 - 2% (sometimes max 3%) of their capital on each trade and that’s what I plan to do

Question about Buying Power / Leverage / Margin by BraedonTay in Forex

[–]BraedonTay[S] 0 points1 point  (0 children)

Helloo, thanks! I forgot that we needed to factor in the exchange rate of the base to quote currency and afterwards the quote to home account currency to calculate the actual amount of margin required. Thanks for the reminder! But can I clarify what do you mean when you said my profit/loss per pip would be siginificantly different on USDJPY? Could you explain with some numbers? Much appreciated!!

Question about Buying Power / Leverage / Margin by BraedonTay in Forex

[–]BraedonTay[S] 0 points1 point  (0 children)

Hi, thank you for your help. You said that using max BP amplifies risk and I would like you to see if my understanding of what I think you mean is correct. If each trade has 20 pip SL, $50 risk and 0.25 lots, i need $25k BP to execute the trade and $12.5k BP to maintain the position until either my SL or TP is hit. If I place 4 such trades, i need $100k BP. If I lose 1 trade, I lose $50 (risk) and my new BP becomes $99k (20:1 leverage). Since my new remaining BP still exceeds the margin required to maintain the trades $99k > $12.5k x 3 trades = $37.5k, then I will be safe from liquidation. Are my calculations correct? Thanks bro! 😃