Risk? Margin question..

[bloodpuddle]

I'm new to trading on margin so I have a simple question.

I am thinking about trading forex and opening an account with a minimal amount. My big question is... Lets say I put in $20000 and everything goes wrong. Computer crashes or somthing.. Can I loose more then $20000?

Can they come take my bank account, car, paycheck??

I am willing to take risk on the inital deposit.... but really don't want to risk any more then that...

Thanks for any advice...

Risk Management Calculator

	Margin The deposit required to open or maintain a position. Margin can be either "free" or "used". Used margin is that amount which is being used to maintain an open position, whereas free margin is the amount available to open new positions. With a $1,000 margin balance in your account and a 1% margin requirement to open a position, you can buy or sell a position worth up to a notional $100,000. This allows a trader to leverage his account by up to 100 times or a leverage ratio of 100:1. If a trader's account falls below the minimum amount required to maintain an open position, he will receive a "margin call" requiring him to either add more money into his or her account or to close the open position. Most brokers will automatically close a trade when the margin balance falls below the amount required to keep it open. The amount required to maintain an open position is dependent on the broker and could be 50% of the original margin required to open the trade.

[FibMaster]

The size of your risk is mostly in your control.

Until you know what you are doing, you should trade with small positions, use sensible stop-losses, do not over-leverage.

If you don't know how to do this, start with a demo account. Using a demo account can teach you much of the same lessons, with no damage to your trading capital.

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Risk Management Calculator

	Leverage Leverage is the ability to gear your account into a position greater than your total account margin. For instance, if a trader has $1,000 of margin in his account and he opens a $100,000 position, he leverages his account by 100 times, or 100:1. If he opens a $200,000 position with $1,000 of margin in his account, his leverage is 200 times, or 200:1. Increasing your leverage magnifies both gains and losses.<p>To calculate the leverage used, divide the total value of your open positions by the total margin balance in your account. For example, if you have $10,000 of margin in your account and you open one standard lot of USD/JPY (100,000 units of the base currency) for $100,000, your leverage ratio is 10:1 ($100,000 / $10,000). If you open one standard lot of EUR/USD for $150,000 (100,000 x EURUSD 1.5000) your leverage ratio is 15:1 ($150,000 / $10,000). For more on leverage, visit the following links: http://www.goforex.net/forex-leverage.htm http://www.goforex.net/forex-leverage-2.htm

[DrForex]

Originally Posted by bloodpuddle

I'm new to trading on margin so I have a simple question.

I am thinking about trading forex and opening an account with a minimal amount. My big question is... Lets say I put in $20000 and everything goes wrong. Computer crashes or somthing.. Can I loose more then $20000?

Can they come take my bank account, car, paycheck??

I am willing to take risk on the inital deposit.... but really don't want to risk any more then that...

Thanks for any advice...

You don't have to fear that as long as you trade sensibly.

The brokers have systems in place to close your positions before you lose all your money.

There always is a miniscule chance that you can lose more than what you have deposited but keep in mind that currencies don't make big moves under normal and even extra volatile circumstances.

Thus, the concern you have only really becomes an issue, if you are highly leveraged and you have lost most off you capital already.

So, in the case that you have lost most of your capital already don't leverage up.

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Risk Management Calculator

	Leverage Leverage is the ability to gear your account into a position greater than your total account margin. For instance, if a trader has $1,000 of margin in his account and he opens a $100,000 position, he leverages his account by 100 times, or 100:1. If he opens a $200,000 position with $1,000 of margin in his account, his leverage is 200 times, or 200:1. Increasing your leverage magnifies both gains and losses.<p>To calculate the leverage used, divide the total value of your open positions by the total margin balance in your account. For example, if you have $10,000 of margin in your account and you open one standard lot of USD/JPY (100,000 units of the base currency) for $100,000, your leverage ratio is 10:1 ($100,000 / $10,000). If you open one standard lot of EUR/USD for $150,000 (100,000 x EURUSD 1.5000) your leverage ratio is 15:1 ($150,000 / $10,000). For more on leverage, visit the following links: http://www.goforex.net/forex-leverage.htm http://www.goforex.net/forex-leverage-2.htm

	Margin The deposit required to open or maintain a position. Margin can be either "free" or "used". Used margin is that amount which is being used to maintain an open position, whereas free margin is the amount available to open new positions. With a $1,000 margin balance in your account and a 1% margin requirement to open a position, you can buy or sell a position worth up to a notional $100,000. This allows a trader to leverage his account by up to 100 times or a leverage ratio of 100:1. If a trader's account falls below the minimum amount required to maintain an open position, he will receive a "margin call" requiring him to either add more money into his or her account or to close the open position. Most brokers will automatically close a trade when the margin balance falls below the amount required to keep it open. The amount required to maintain an open position is dependent on the broker and could be 50% of the original margin required to open the trade.