Margin & Free Margin problem on BackTest ? - page 2

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Fernando Carreiro #:

Look at the Contract Specifications to find out ...


tks you, what is mean 50000 in your photo ?, and that is my screenshot 


 
ZeroCafeine #: tks you, what is mean 50000 in your photo ?, and that is my screenshot 

When in doubt, consider referencing the documentation ...

Documentation on MQL5: Constants, Enumerations and Structures / Environment State / Symbol Properties

SYMBOL_MARGIN_HEDGED

Contract size or margin value per one lot of hedged positions (oppositely directed positions of one symbol). Two margin calculation methods are possible for hedged positions. The calculation method is defined by the broker.

Basic calculation:

  • If the initial margin (SYMBOL_MARGIN_INITIAL) is specified for a symbol, the hedged margin is specified as an absolute value (in monetary terms).
  • If the initial margin is not specified (equal to 0), SYMBOL_MARGIN_HEDGED is equal to the size of the contract, that will be used to calculate the margin by the appropriate formula in accordance with the type of the financial instrument (SYMBOL_TRADE_CALC_MODE).

Calculation for the largest position:

  • The SYMBOL_MARGIN_HEDGED value is not taken into account.
  • The volume of all short and all long positions of a symbol is calculated.
  • For each direction, a weighted average open price and a weighted average rate of conversion to the deposit currency is calculated.
  • Next, using the appropriate formula chosen in accordance with the symbol type (SYMBOL_TRADE_CALC_MODE) the margin is calculated for the short and the long part.
  • The largest one of the values is used as the margin.

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ok tks you, I will check with this function when get some free time for it, I also contacted my broker and they confirmed that when I open a long and a short position at the same time, the margin required is only for the larger of the open positions.
 
Fernando Carreiro #:
  • What is Margin?
  • Forex Leverage and Margin Explained

    • hello @ Fernando Carreiro

    As promised I've just had a look at the two links you gave me, so far so good I haven't learnt anything new, but there is one question I'm asking myself which doesn't make sense to me: 

    Why aren't there more fees if you trade with a leverage of 30 or 500?

    I understand that there is more risk, but if the risk is calculated, how come a broker doesn't charge more for higher leverage and vice versa?

    I'm talking about CFDs, of course,

    I have contacted my broker and he tells me that no, there are no higher charges for higher leverage.

    Example on EUR/USD a position of 0.01 Lot :

    - with leverage 30, the margin required is : 33,33€
    - with leverage 500, the margin required is : 2€

    I find it strange to use high leverage at no extra cost. Maybe our broker is waiting for us to do something stupid and get ourselves wiped out, or maybe there's something else I'm missing ?

    Best Reguards,
    ZeroCafeine.

     
    ZeroCafeine #:

    hello @ Fernando Carreiro

    As promised I've just had a look at the two links you gave me, so far so good I haven't learnt anything new, but there is one question I'm asking myself which doesn't make sense to me: 

    Why aren't there more fees if you trade with a leverage of 30 or 500?

    I understand that there is more risk, but if the risk is calculated, how come a broker doesn't charge more for higher leverage and vice versa?

    I'm talking about CFDs, of course,

    I have contacted my broker and he tells me that no, there are no higher charges for higher leverage.

    Example on EUR/USD a position of 0.01 Lot :

    - with leverage 30, the margin required is : 33,33€
    - with leverage 500, the margin required is : 2€

    I find it strange to use high leverage at no extra cost. Maybe our broker is waiting for us to do something stupid and get ourselves wiped out, or maybe there's something else I'm missing ?

    Best Reguards,
    ZeroCafeine.


    Leverage is how brokers incentivise more trading, by offering an indirect "loan", that they will never lose out on.

    The more you trade, the more they profit in commission and spread, irrespective of which the trader profits or loses in their trading.

     

    hi  Fernando Carreiro

    thank you very much for your reply, I hadn't thought about that aspect, it's true that with more margin you can take more positions and therefore pay the fees and different commissions several times over.


    So, apart from being stupid and greedy and miscalculating your risk, there are no hidden costs.


    tks again, 
    Best Reguards,
    ZeroCafeine 😊

     
    ZeroCafeine #:

    Example on EUR/USD a position of 0.01 Lot :

    - with leverage 30, the margin required is : 33,33€
    - with leverage 500, the margin required is : 2€

    I find it strange to use high leverage at no extra cost. Maybe our broker is waiting for us to do something stupid and get ourselves wiped out, or maybe there's something else I'm missing ?

    Hi ZeroCafeine,

    If by "extra cost" you mean commissions there is nothing strange about that, as they are calculated for example at $3.75 per 1.00 lot traded, i.e. it really is a percentage thing.

    As it has been said before, leverage is a "trap" that we must take into account in money management and only use it to gain free margin based on a lower cost of the lots, but never use it to overleverage and step on the accelerator (metaphorically speaking).

    And what is the point of having more free margin if I don't use it? To be able to sleep with the peace of mind that your account will not explode in the first "flashcrash" (remember that if the price moves too fast the SL will be executed at the quoted price and will not be respected, the same for the TP ... in short; slippage), and have a greater margin of "errors" (losing trades).

     
    Miguel Angel Vico Alba #:
    As it has been said before, leverage is a "trap" that we must take into account in money management and only use it to gain free margin based on a lower cost of the lots, but never use it to overleverage and step on the accelerator (metaphorically speaking).

    I totally agree with this idea, leverage must be used with great care, I know I'm not and never will be super man, 


    Miguel Angel Vico Alba #:
    And what is the point of having more free margin if I don't use it? To be able to sleep with the peace of mind that your account will not explode in the first "flashcrash" (remember that if the price moves too fast the SL will be executed at the quoted price and will not be respected, the same for the TP ... in short; slippage), and have a greater margin of "errors" (losing trades).

    I also understand and agree with you on this point of view, one of the ideas, for example, of using leverage would be to put a small part of your capital with the broker and use leverage as if it were all your trading capital,

    That way, at the very least, if I do anything with my trading account or if the broker disappears, at least it'll just be a part of my capital.

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