Beginner Question

[mojo321]

My first question is regarding margin. What I set as my leverage with my broker will determine the margin requirement for my trades. Right? So if I say 1:100, my margin requirement will be very small for a 1 lot trade. But If I say 1:3, my margin requirement will be much higher. Having the higher margin tied up in each trade simply allows me to set our stops out further, right? It doesn't really change the risk, it just eliminates the risk of margin call. Only the size of the transation , aka 1lot, 0.1lot, 0.01lot, will effect the price per pip. Is all of that correct?

I need to get something straight. I've been demo account trading for a while now, and I bought Bird Watching, which I'm working my way through now. I am planning on opening an account with $6000. That's my risk capitol. (about 8% of my current portfolio)

For kicks, I have been demo trading 1 Lot in one direction. I have gotten about 600 over the last 3 weeks.

Now, at 1 lot, that comes out to $6000. At 0.1 lot, that comes out to $600 per month. (I am more likely to trade the 0.1 lot size for a while when I go live)

So when someone says, "I pull 1000 pips a month" are they saying, "I make $10,000 per month."?

I was here a long while ago, but now I'm back as I have accumulated this bit of risk capitol, it is time to get serious.

Dr Forex's Bird Watching in Lion Country ebook

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	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.

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