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grinpip

Micro account with leverage of 1:400 and margin suppose to protect you from losing?

I want to open a micro account with leverage of 1:400 because the higher the leverage the lower the margin right? (I will not break my risk management rules) That was the first question, the second one is if my equity is 50$ and I'm on a leverage of 1:400 and I lost for example 25% of my capital or if I blew up my account, I have lost 25% of my capital or 50$ if I blew up my account? Or there's a possibility that I lost more? (Depending in the leverage). What is exactly the risk I am taking? Can someone please explain me how is it possible to lose more than your initial capital when margin suppose to protect you from losing more? thanks

about 1 year ago

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Intick

Platform automatically calculates the stops for your positions. However if you get enormous slippage, you might get your account into negative side. However, it is not your concern. The broker is responsible to close your positions before your account goes below zero.
However trading with 1:400 leverage is not reasonable, as you can open position of 20 000 USD with your 50$. Which means if the market moves 0.25% (around 33 pips of EUR/USD) in opposite direction, you will lose your deposit.

about 1 year ago

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ForexEA

Hello, there is not possible to lose more than you have. If trade go in opposite direction, you may get margin call when your free margin lever drops, for example, to 20% from initial margin.

Second, there is no need to use leverage 400:1. Yes, with 400:1 you need less free margin but there is no use in it. If you don't run 4-5 trades simultaneously, there is no extra benefit of leverage 400:1. Pro traders use no more than 50:1.

Furthermore, do not risk more than 2-5% per trade.

Learn more about leverage and margin at http://pipburner.com/understanding-...

about 1 year ago

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