A very simple question on S&P 500 leveraged trading

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Dear all,


I am stuck with something which is probably very basic, but can't figure it out.  Here it is.  I am writing an expert in MT5 to trade S&P 500, symbol name SPY.  My initial budget is 10'000 and leverage 1:100.  When I test it, I use the command:

Buy(Volume,
    _Symbol,      // SPY
    0.0,          // price
    0.0,          // stop loss
    0.0,          // take profit
    "Buying SPY");


Price per share is around 400, as far as I can read the charts.  If I set the volume to 50 (I believe that is 50 shares) it opens the position.  If I set the volume to 100, it also opens it.  But if I set the volume to 200, the Strategy Tester tells me I don't have enough money, but I don't understand why?

If price per share is 400, and I buy 200 shares it is roughly 80'000.  That is more than my budget, but my leverage of 1:100 should allow me to buy that much, or?

Please let me know what I am doing wrong here?  I guess there is something I don't understand well.  What is volume in MT5 when you buy index such as SPY?  I believe it was the price of one share, or?

Any help or advie would be highly appreaciated.

  

     Cheers

 
Bojan Niceno:

Dear all,


I am stuck with something which is probably very basic, but can't figure it out.  Here it is.  I am writing an expert in MT5 to trade S&P 500, symbol name SPY.  My initial budget is 10'000 and leverage 1:100.  When I test it, I use the command:


Price per share is around 400, as far as I can read the charts.  If I set the volume to 50 (I believe that is 50 shares) it opens the position.  If I set the volume to 100, it also opens it.  But if I set the volume to 200, the Strategy Tester tells me I don't have enough money, but I don't understand why?

If price per share is 400, and I buy 200 shares it is roughly 80'000.  That is more than my budget, but my leverage of 1:100 should allow me to buy that much, or?

Please let me know what I am doing wrong here?  I guess there is something I don't understand well.  What is volume in MT5 when you buy index such as SPY?  I believe it was the price of one share, or?

Any help or advie would be highly appreaciated.

  

     Cheers

Are you sure the volume is per share ?

What instrument is this ? CFD ? or... ?

Also are you sure the leverage is 1:100 ? That's certainly the account leverage but some symbols can have a different one.

You check for all these informations in the symbol's specifications.

 
Alain Verleyen #:

Are you sure the volume is per share ?

What instrument is this ? CFD ? or... ?

Also are you sure the leverage is 1:100 ? That's certainly the account leverage but some symbols can have a different one.

You check for all these informations in the symbol's specifications.

Thanks for your advice which I now try to follow.


> Are you sure the volume is per share ?

Well, when I examine the symbol properties, under the file "Contract size" it is written "1.000000", so my assumption would be that volume would be per share.

>  What instrument is this ? CFD ? or... ?

I think it is, the field "Calculation" writes: "CFD"

> Also are you sure the leverage is 1:100 ? That's certainly the account leverage but some symbols can have a different one.

Hmm, I am not really sure.  I do set 1:100 from a drop-down menu in the "Strategy Testing" under "Settings" and it was working as expected when I was trading other commodities.

I googled a bit more on the issue and found a direct correlation between margin and leverage.  It should be:

Margin: Leverage:

1% 1:100

2% 1:50

5% 1:20

20% 1:5

For my symbol (SPY), I can see in the "Strategy Tester" that the "Margin Rates" for both buy and sell are set to 0.2.  If this means that margins are 20% (0.2*100 = 20), the leverage for the symbol I am trading is 1:5.  Is my thinking correct?


    Thanks and kind regards

 
Bojan Niceno #:

Thanks for your advice which I now try to follow.


> Are you sure the volume is per share ?

Well, when I examine the symbol properties, under the file "Contract size" it is written "1.000000", so my assumption would be that volume would be per share.

>  What instrument is this ? CFD ? or... ?

I think it is, the field "Calculation" writes: "CFD"

> Also are you sure the leverage is 1:100 ? That's certainly the account leverage but some symbols can have a different one.

Hmm, I am not really sure.  I do set 1:100 from a drop-down menu in the "Strategy Testing" under "Settings" and it was working as expected when I was trading other commodities.

I don't know where to find leverage for a particular symbol.  I don't see it in the symbol properties from the "Strategy Tester".  Is it something I should check with my broker?

    Kind regards

You can ask your broker about it. But it could also be available on their webpage.

Additionally, post a screenshot of the symbol specifications here.
 
Dominik Christian Egert #:
You can ask your broker about it. But it could also be available on their webpage.

Additionally, post a screenshot of the symbol specifications here.

Thanks Dominik


For some reason the broker's website freezes when I try to connect to it  :-S

However, a screenshot of the symbol's properties is attached to this message.

Files:
Symbol_SPY.png  100 kb
 
Bojan Niceno #:

Thanks for your advice which I now try to follow.


> Are you sure the volume is per share ?

Well, when I examine the symbol properties, under the file "Contract size" it is written "1.000000", so my assumption would be that volume would be per share.

>  What instrument is this ? CFD ? or... ?

I think it is, the field "Calculation" writes: "CFD"

> Also are you sure the leverage is 1:100 ? That's certainly the account leverage but some symbols can have a different one.

Hmm, I am not really sure.  I do set 1:100 from a drop-down menu in the "Strategy Testing" under "Settings" and it was working as expected when I was trading other commodities.

I googled a bit more on the issue and found a direct correlation between margin and leverage.  It should be:

Margin: Leverage:

1% 1:100

2% 1:50

5% 1:20

20% 1:5

For my symbol (SPY), I can see in the "Strategy Tester" that the "Margin Rates" for both buy and sell are set to 0.2.  If this means that margins are 20% (0.2*100 = 20), the leverage for the symbol I am trading is 1:5.  Is my thinking correct?


    Thanks



    Kind regards

Yes, that seems correct.
 
Dominik Christian Egert #:
Yes, that seems correct.
Thanks a lot and have a great weekend
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