Margin is one of the most important concepts of Forex trading. However, a lot of people don't understand its significance, or simply misunderstand the term. A Forex margin is basically a good faith deposit that is needed to maintain open positions. A margin is not a fee or a transaction cost, but instead, a portion of your account equity set aside and assigned as a margin deposit.
Let's presume that the market keeps on going against you. In this case, the broker will simply have no choice but to shut down all your losing positions. This limit is referred to as a stop out level. For example, when the stop out level is established at 5% by a broker, the trading platform will start closing your losing positions automatically if your margin level reaches 5%. It is important to note that it starts closing from the biggest losing position.
The market values/prices used to compute the equity or margin requirement in an Interactive account may differ from the price disseminated by exchanges or other market data sources, and may represent Interactive's valuation of the product. Among other things, Interactive may calculate its own index values, Exchange Traded Fund values or derivatives values, and Interactive may value securities or futures or other investment products based on bid price, offer price, last sale price, midpoint or using some other method. Interactive may use a valuation methodology that is more conservative than the marketplace as a whole.
If you sell a security short, you must have sufficient equity in your account to cover any fees associated with borrowing the security. If you borrow the security through us, we will borrow the security on your behalf and your account must have sufficient collateral to cover the margin requirements of the short sale. To cover administrative fees and stock borrowing fees, we must post 102% of the value of the security borrowed as collateral with the lender. In instances in which the security shorted is hard to borrow, borrowing fees charged by the lender may be so high (greater than the interest earned) that the short seller must pay additional interest for the privilege of borrowing a security. Customers may view the indicative short stock interest rates for a specific stock through the Short Stock (SLB) Availability tool located in the Tools section of their Account Management page. For more information concerning shorting stocks and associated fees, visit our Stock Shorting page.
tweet at 3:44pm: [RTRS] - U.S. CDC DIRECTOR REDFIELD SAYS RISK TO U.S. PUBLIC FROM CORONAVIRUS OUTBREAK IS LOW tweet at 3:46pm: REDFIELD SAYS THERE ARE 191 INDIVIDUALS UNDER INVESTIGATION IN U.S. AMID CORONAVIRUS OUTBREAK tweet at 3:45pm: US CDC Director Redfield: This is a significant global situation. https://t.co/Ao1Ci2OEfi tweet at 3:52pm: US declares the coronavirus a public health emergency, implementing special temporary measures $SPX
This material does not contain and should not be construed as containing investment advice, investment recommendations, an offer of or solicitation for any transactions in financial instruments. Please note that such trading analysis is not a reliable indicator for any current or future performance, as circumstances may change over time. Before making any investment decisions, you should seek advice from independent financial advisors to ensure you understand the risks.
Let’s cover this with an example. If you have $1,000 in your trading account and use a leverage of 1:100 you could theoretically open a position size of $100,000. However, by doing so, your entire trading account would be allocated as the required margin for the trade, and even a single price tick against you would lead to a margin call. There would be no free margin to withstand any negative price fluctuation.
Multiple Currency Pairs - Similarly we need to support the major currency pairs beyond "Cable" (GBP/USD). There are two aspects to this. The first is to correctly handle the calculations when neither the base or quote of a currency pair is equal to the account denomination currency. The second aspect is to support multiple positions so that we can trade a portfolio of currency pairs.
One of the unique features of TradingDiary Pro which you cannot find in any trading journal software is the options strategy support. TradingDiary Pro is the perfect solution for an options trading journal and tracking your stock and futures options strategies. What is an options strategy? Options strategy is simultaneously buying or selling one or […]
Note also that when we begin storing our trades in a relational database (as described above in the roadmap) we will need to make sure we once again use the correct data-type. PostgreSQL and MySQL support a decimal representation. It is vital that we utilise these data-types when we create our database schema, otherwise we will run into rounding errors that are extremely difficult to diagnose!
As part of the Universal Account service, we are authorized to automatically transfer funds as necessary between your securities account and your futures account in order to satisfy margin requirements in either account. You can configure how you want us to handle the transfer of excess funds between accounts on the Excess Funds Sweep page in Account Management: you can choose to sweep funds to the securities account, to the futures account, or you can choose to not sweep excess funds at all.
Whether you have assets in a securities account or in a futures account, your assets are protected by U.S. federal regulations governing how brokers must protect your property and funds. In the securities account, your assets are protected by SEC and SIPC rules. In the futures account, your assets are protected by CFTC rules requiring segregation of customer funds. You are also protected by our strong financial position and our conservative risk management philosophy. See our Strength & Security page.
The "philosophy" of the forex trading system, as with the rest of the QuantStart site, is to try and mimic real-life trading as much as possible in our backtesting. This means including the details that are often excluded from more "research oriented" backtesting situations. Latency, server outages, automation, monitoring, realistic transaction costs will all be included within the models to give us a good idea of how well a strategy is likely to perform.
GUI Control and Reporting - Right now the system is completely console/command line based. At the very least we will need some basic charting to display backtest results. A more sophisticated system will incorporate summary statistics of trades, strategy-level performance metrics as well as overall portfolio performance. This GUI could be implemented using a cross-platform windowing system such as Qt or Tkinter. It could also be presented using a web-based front-end, utilising a web-framework such as Django.
Now, let’s say you open a trade worth $50,000 with the same trading account size and leverage ratio. Your required margin for this trade would be $500 (1% of your position size), and your free margin would now also amount to $500. In other words, you could withstand a negative price fluctuation of $500 until your free margin falls to zero and causes a margin call. Your position size of $50,000 could only fall to $49,500 – this would be the largest loss your trading account could withstand.