Hi All,
So I have started a demo account primarily with FXCM (happy for suggestions on better apps etc). There are a few things i find odd with FX trading etc(previously have done stock trading).
1. Balance/Equity in the app. On a demo account you start with 5k which is simple enough. However, as you can see on them image, I have managed to buy 6k of NZD/USD (at 0.68367 and 0.68508), and 1K of USD/CAD (at 1.35549). All of that adds up to more than £5,000 so I shouldn't of been able to allowed to buy that much surely? As in my head I am doing (5k x 0.68367) + (1k x 0.68508) + (1k x1.35549) which comes to more than 5k. Also as an experiment I just started buying even more at 5k and it didn't stop me once. So I found this very odd? As I expected by 5k balance to reduce by the amount I had bought and then tell me a p/l on that trade etc.
So what I actually assume is, I am not actually buying the 5k lots, I am merely taking the risk as if I was. So instead of risk being 1:1 i am essentially making it 1:5 and each pip movement will be exaggerated by 5. Thus the risk increase and you can either lose your money faster or make more profit.
2. 'Usable Margin'. It says my usable margin is around about 98% however, again based off of my thoughts above this should be something very small if not a negative number. So how should I be thinking of this?
I understand these will all be of a mind set. I'm an accountant, so I'm used to seeing debits and credits and seeing one baalnce reduce and one increase etc. However, at this minute in time, nothing is decreasing regardless of what I purchase.
Any help would be helpful, as clearly I still have my accounting head on!
One final query. A lot of apps say, you can lose more equity than you deposit. Surely if you make losses that exceed your balance the positions will all close and it will just be 0 in your account?
Any recommendations on what apps for trading would be greatly appreciated!
thanks,
P.s Understand I sound a complete noob.
Viz.
So I have started a demo account primarily with FXCM (happy for suggestions on better apps etc). There are a few things i find odd with FX trading etc(previously have done stock trading).
1. Balance/Equity in the app. On a demo account you start with 5k which is simple enough. However, as you can see on them image, I have managed to buy 6k of NZD/USD (at 0.68367 and 0.68508), and 1K of USD/CAD (at 1.35549). All of that adds up to more than £5,000 so I shouldn't of been able to allowed to buy that much surely? As in my head I am doing (5k x 0.68367) + (1k x 0.68508) + (1k x1.35549) which comes to more than 5k. Also as an experiment I just started buying even more at 5k and it didn't stop me once. So I found this very odd? As I expected by 5k balance to reduce by the amount I had bought and then tell me a p/l on that trade etc.
So what I actually assume is, I am not actually buying the 5k lots, I am merely taking the risk as if I was. So instead of risk being 1:1 i am essentially making it 1:5 and each pip movement will be exaggerated by 5. Thus the risk increase and you can either lose your money faster or make more profit.
2. 'Usable Margin'. It says my usable margin is around about 98% however, again based off of my thoughts above this should be something very small if not a negative number. So how should I be thinking of this?
I understand these will all be of a mind set. I'm an accountant, so I'm used to seeing debits and credits and seeing one baalnce reduce and one increase etc. However, at this minute in time, nothing is decreasing regardless of what I purchase.
Any help would be helpful, as clearly I still have my accounting head on!
One final query. A lot of apps say, you can lose more equity than you deposit. Surely if you make losses that exceed your balance the positions will all close and it will just be 0 in your account?
Any recommendations on what apps for trading would be greatly appreciated!
thanks,
P.s Understand I sound a complete noob.
Viz.
Queries/Observations of a noob.
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