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Money management using margin level??

Mohd Najib (zebbcro)
Jun 30 2014 at 19:17
28帖子
Hi anyone.. I'm newbies.. just want some advice from the expertise here.. does it relevant to use margin level as a money management when open a trading position??.. for example, when I trade to multiply currencies, I will open about 7 position with a suitable lot each, and make sure that the margin level above the 1000%.. when I have loss, and look at the margin level below 1000%, I will cut loss my open position.. does this way of trading can hold in a long terms??.. if not, any suggestions??
be calm, the world is in your hand
CrazyTraderfx (CrazyTrader)
Jun 30 2014 at 22:24
1718帖子
The easiest way for you to check this out, would be to create a demo account with the same deposit you would trade live and set same leverage.

Open your 7 positions, after 2 weeks or so, see how it goes and then forecast deeper move.
Mohd Najib (zebbcro)
Jul 01 2014 at 06:34
28帖子
CrazyTrader posted:
The easiest way for you to check this out, would be to create a demo account with the same deposit you would trade live and set same leverage.

Open your 7 positions, after 2 weeks or so, see how it goes and then forecast deeper move.

Ow.. thank you for reply.. I will do that
be calm, the world is in your hand
growthera
Jul 01 2014 at 14:52
86帖子
there are of course millions of ways to do MM. One item I always want to keep in mind as well is, independently of margin considerations, is if all my trades go the wrong way at the same time, what's the maximum amount in $$$ I am willing to lose.
Mohd Najib (zebbcro)
Jul 01 2014 at 18:07
28帖子
growthera posted:
there are of course millions of ways to do MM. One item I always want to keep in mind as well is, independently of margin considerations, is if all my trades go the wrong way at the same time, what's the maximum amount in $$$ I am willing to lose.

Thanks for ur opinions.. I will keep that in mind
be calm, the world is in your hand
helgie
Jul 11 2014 at 16:37
34帖子
yes you better test them before, or backtest them.. i have backtest strategy like this (but cutloss in pips,using EA) but the account not long lasting..
Mohd Najib (zebbcro)
Jul 16 2014 at 06:31
28帖子
helgie posted:
yes you better test them before, or backtest them.. i have backtest strategy like this (but cutloss in pips,using EA) but the account not long lasting..

Yeah.. that's right helgie.. I found that mm control using this strategy are not valid for the big leverage like 1:1000.. so I need to put stop loss for my trade.. tanx everybody for help and comment
be calm, the world is in your hand
vontogr (togr)
Jul 16 2014 at 09:33
4862帖子
Using low leverage to limit the trade risk is...
...outdated

Trying the same on high leverage will require you upfront PC as long as there is open trade

You can use either SL per position, either manually or by EA

Or some of the many tools monitoring your equity and closing trades at defined level
Mohd Najib (zebbcro)
Jul 16 2014 at 19:48
28帖子
togr posted:
Or some of the many tools monitoring your equity and closing trades at defined level

Yeah.. it depends on individual.. many old time traders suggest me to using low leverage to hold long in this industry.. but i have seen your portfolio sir and u are a good trader.. its ok if u have winning system above 80%.. I seems very comfortable with my leverage now.. thanks for your advice
be calm, the world is in your hand
Adrian Matusiak (adrian8891)
Jul 16 2014 at 20:01
696帖子
togr posted:
Using low leverage to limit the trade risk is...
...outdated

Indeed. I wish to have even 1:2000 levereage. I got my own ideas how to decrease risk , and no matter do I have 1:200 or 1:2000 . Problem is that we MUST go to lower leverage when deposit/earn more money.
PAMM MANAGER // Professional Fund Manager
vontogr (togr)
Jul 17 2014 at 06:43
4862帖子
adrian8891 posted:
togr posted:
Using low leverage to limit the trade risk is...
...outdated

Indeed. I wish to have even 1:2000 levereage. I got my own ideas how to decrease risk , and no matter do I have 1:200 or 1:2000 . Problem is that we MUST go to lower leverage when deposit/earn more money.

You can have 1:3000
https://fxglory.com
Adrian Matusiak (adrian8891)
Jul 17 2014 at 08:10
696帖子
Yes, I know that Togr, but I don't trust fxglory... Even their website is kind of.....unproffesional ;)
PAMM MANAGER // Professional Fund Manager
vontogr (togr)
Jul 17 2014 at 10:10
4862帖子
adrian8891 posted:
Yes, I know that Togr, but I don't trust fxglory... Even their website is kind of.....unproffesional ;)

That's my point. Only such brokers offers such leverage:)
Bob LLewellyn (ForexAssistant)
Aug 20 2014 at 16:08
465帖子
In a nut shell, using margin to set your money management is one of the worst ways to do it because margin and the marginal leverage is just bankers and their governments protecting themselves and the brokers. Marginal leverage has nothing to do with actual trading.

The leverage that does have to do with trading is 100,000 to 1. One lot equals 100,000 units or 10,000 on a mini account, you have only those two choices, the other leverage is just how much do you want to protect your broker from you losing more than is in your account. 200 to 500 to one is good enough. Over that you are risking over drafting your account and would have to make up any difference if you should get a margin call.

Listen to togr and Adrian they have been doing this for years, use a ratio between how much you are willing to lose if everything goes wrong and the size of the trade, that is the best way to do your money management..

A lot of new traders think a low percentage of draw down is something special. I hear people brag about having no higher than 10% DD. If that is so, then by doubling their lot size using the same techniques would double their return without going over 20%.. The percentages of DD in themselves are meaningless, all we want to do is protect from a margin call. A margin call is 100% DD. Anything less is still safe so long as you are sure that the DD will not go over that amount. 50% DD is of course closer to optimal but that is a general statement because it really depends on how tight your system is.

My system is so tight, I can tell you with in a couple of dollars what my maximum draw-down would be when the price hit the highest and lowest that it has ever reached. That is my worst case so I make that amount, 50 - 60% of my balance. I don't worry about how much I am going to make, just how safe the trades are.

Hope this helps you see money management from a systemic trading point of view.

Want to also take this opportunity to say Hi to togr, always good knowing your still around my friend.

Bob
where research touches lives.
vontogr (togr)
Aug 21 2014 at 07:42
4862帖子
@ForexAssistant
Hi Bob,

you actually mixed up 2 different things.

...The leverage that does have to do with trading is 100,000 to 1...

That's not leverage.
100,000 is number of units you are buying or selling for 1 standard lot.

So once again.
1 lot. EURUSD. Trade size is 100,000 EUR. Without leverage you would need 133,000 USD to trade 100,000 EUR. That's margin requirement. It has nothing to do with profit or loss.
With leverage 1:10 MR would be 13,300 USD.
With leverage 1:100 MR would be 1,330 USD
With leverage 1:1000 MR would be 133 USD.

If your margin drops to defined level
- you are not able to open more positions
- positions are liquidated.

With high leverage of 1:500 or 1:1000 margin actually does not limit your trading. However of course you are limited by equity,SL,TP, etc...
Ivan (StoneHeart)
Aug 21 2014 at 08:58
131帖子
Having account with HIGH Account_Leverage
give you ability to have LOW Margin requirement.
There is NOT obligation to use this Leverage.

If your system USE maximum Leverage 1:10
you need Account_Leverage no less than 1:10
But on higher Account_Leverage, you will have more free money,
... let say for Floating_Loss.

It is good to make difference between :
-> Account_Leverage and ...
-> actually Used_Leverage
First define Margin required,
Second define levels of : Margin_Call and Stop_Out.
Small GAIN, big WIN
Bob LLewellyn (ForexAssistant)
Aug 21 2014 at 09:09
465帖子
Yes, that is what I was saying, ' margin actually does not limit your trading. However of course you are limited by equity,SL,TP, etc...' Everyone confuses the margin leverage 200:1 as the trade leverage like they do in stocks and what not. The term is miss leading and should be changed, but I don't have a better name for it at the moment.

Bob
where research touches lives.
vontogr (togr)
Aug 21 2014 at 09:31
4862帖子
ForexAssistant posted:
Yes, that is what I was saying, ' margin actually does not limit your trading. However of course you are limited by equity,SL,TP, etc...' Everyone confuses the margin leverage 200:1 as the trade leverage like they do in stocks and what not. The term is miss leading and should be changed, but I don't have a better name for it at the moment.

Bob

well there is nothing like margin leverage
Leverage is ratio allowing you to trade bigger amounts currency
Margin requirement is money needed on your account to be able open trade.
So leverage is number 1:x
Margin is dollar amount 'reserved by broker' on your account
SteveHanks
Jun 25 2021 at 06:51
536帖子
ForexAssistant posted:
In a nut shell, using margin to set your money management is one of the worst ways to do it because margin and the marginal leverage is just bankers and their governments protecting themselves and the brokers. Marginal leverage has nothing to do with actual trading.

The leverage that does have to do with trading is 100,000 to 1. One lot equals 100,000 units or 10,000 on a mini account, you have only those two choices, the other leverage is just how much do you want to protect your broker from you losing more than is in your account. 200 to 500 to one is good enough. Over that you are risking over drafting your account and would have to make up any difference if you should get a margin call.

Listen to togr and Adrian they have been doing this for years, use a ratio between how much you are willing to lose if everything goes wrong and the size of the trade, that is the best way to do your money management..

A lot of new traders think a low percentage of draw down is something special. I hear people brag about having no higher than 10% DD. If that is so, then by doubling their lot size using the same techniques would double their return without going over 20%.. The percentages of DD in themselves are meaningless, all we want to do is protect from a margin call. A margin call is 100% DD. Anything less is still safe so long as you are sure that the DD will not go over that amount. 50% DD is of course closer to optimal but that is a general statement because it really depends on how tight your system is.

My system is so tight, I can tell you with in a couple of dollars what my maximum draw-down would be when the price hit the highest and lowest that it has ever reached. That is my worst case so I make that amount, 50 - 60% of my balance. I don't worry about how much I am going to make, just how safe the trades are.

Hope this helps you see money management from a systemic trading point of view.

Want to also take this opportunity to say Hi to togr, always good knowing your still around my friend.

Bob
Very nicely explained. It will help many traders.
SofieAndreasen
Jul 08 2021 at 16:16
759帖子
Money management is essential in trading to control the vast money which is increased by high leverage.
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