5/10 -1 leverage instead of 1000 – 1 leverage – how can that be any good?
1000 – 1 is not a favour to you
Brokers are not generous
Markets can spike up 2% and straight back down
A random price surge is common
So why exit for a loss?
Because a broker can force you to
Because you have a loan called leverage, and broker doesnt care
Professional traders use 5:1 when they have sub 100k accounts. 3:1 is good for 100 – 500k accounts, 1:2 is for higher
5:1 leverage allows;
Traders to ride out small random negative swings
Traders to use stop losses further away from the ‘others’
Traders to learn to run profits
Traders using stop orders less and watching the position more
Money to hold positions
A boost with downsides, imagine borrowing from a loan shark to play roulette. Brokers cut you before the wheel stops spinning, e.g. A gambler has one spin of the wheel and loses, he borrows money for another 3 spins, if he makes money on the first 2 of them he is where he wanted to be when he started – with a win. If he loses just 1 out of those 2, the broker stops him and takes the last spin back and he now owes for a spin and cannot play again.
Part of your money that can be used to play, you need some at least to get home afterwards
if you play and double up, you need to reserve more of what is left
Required Margin = Notional value x Exchange rate between Base currency and Account Currency x 1/Leverage
Required Margin = Notional value x Exchange rate between base currency and Account Currency x Margin requirement
The base currency is the currency written on the left side of the currency pair.E.g EUR/USD – The base currency is the EuroThe Account currency is the currency in which the Trader’s account is denominated.
If the base currency is same as account currency, then the calculation is as follows:
Required Margin = Notional value x Exchange rate between base currency and account currency
If an account has $100,000 as account balance, and a trade of 0.1lot is opened which is worth $10,000 (this $10,000 becomes the Notional value), with a margin requirement of 2%. This means 2% of the notional value (10,000) has to be set aside for this trade from the balance. The required margin in this case is $200.
This is the sum of required margins for all open trades.
If we take three trades of 0.1, 0.1 and 0.2 lot using same account balance as above and same Margin Requirement per trade, then our used margin would be the sum of the Required margins of these trades.
This is the Margin left for trades after used margin has been taken away.
Allowed Pairs and Position Size Guide
Super Lite $25,000: Zero Spread and Super Pro $50,000
The following are typical maximum open positions allowed on each subscription package. These limits will vary depending on your actual account balance, current exchange rates and the actual or perceived volatility used by the broker when setting margin requirements.
Simply put, the higher the standard deviation of the pair the more money the broker will want from your backer to allow you to trade with a liquidity provider. The reason for this is that, if prevailing conditions could bring about sudden moves such as the Swiss Franc revaluation in January 2015 then they want more buffer from the trader. As you trade with a liquidity provider, if something suddenly happens causing huge swings the liquidity providers would simply widen the spread or not make prices. This would then mean huge losses for someone, and as the brokers found out in January 2015 it would be them if the trader (or his firm) simply cannot pay the huge loss from funds on deposit.
Therefore the following table is indicative of the limits during normal conditions as calculated from indicators such as ADR.
In theory if the broker uses ADR (average daily range indicator) then the plan is that as the money required to open the same position increases, so does the size of the moves and hence the bigger the daily range and the possible profits on each move. That’s the theory, however volatility can change faster than the brokers ability to change the parameters and so the professional trader must take responsibility for adjusting position size as volatility increases.
Only the pairs listed in the table may be traded.
Notes on Margins and Product table
The values shown are indicative and subject to regular small variations.
Pip values will change according to the exchange rate of the second paired currency vs USD
Margin requirements will periodically change inline with significant changes in market volatility and currency exchange rates.
Zero Spread variable leverage reflect ADR across majors and minors
True Zero Spread is only available on gaming or gambling platforms where only the price feed is real. Trades are simulated and can therefore be realised in theoretical circumstances. Bulive promo demo account is connected to the Blulive matrix and allows the simulated trades to be placed in the real market with slippage a separate cost. The promo is therefore used to assess the ability of traders to beat the market before brokerage costs. Blulive estimate that 30% of traders are in this position with potential to become the 10% minority able to earn a living and provide ROI for investors
Real account Zero Spread are raw spreads without broker markup
Every real money trade in the market includes a 2 way continuous auction amongst competitive participants who earn a living from providing liquidity (the ability for any trader to trade at that time). This process is called ‘price discovery’ and will always involve a bid/ask spread (difference in buy and sell liquidity price levels. Another term to be aware of is ‘zero sum’ game, i.e. every trade has a buyer and seller and depending on the exit prices after the trade will result in one winner and one loser of the same amount (less the parasitic cost of the broker)
This competition to take the other side of presumable uninformed and badly behaved retail traders is why the spread is always variable. Yet brokers who pass trades on to these liquidity providers share either a commission or increase the spread by a set amount or even both.
Liquid Markets Blulive platform is the first Prop firm to guarantee ‘raw’ spreads with no broker markup, excessive widening around retail stop order clusters or a myriad of ‘tricks’. The Zero Spread subscription account is therefore a pure raw spread. The Zero spread innovation is available on a promo basis for the Super Lite and Super Pro to allow our brokers to feed their families, however a commission is charged separately that is fixed between $8 and $10 per $100,000 swapped for another currency.
The traders who trade selectively and hold positions are the main beneficiaries of the Zero Spread innovation.
Super Lite and Super Pro spreads are based on aggregated leading institution price feeds. Blulive aggregate volume and advanced technology command tighter spreads than any broker offers to retail, this can be seen in the MT4 chart and execution window of each of the 3 Blulive broker MT4s.
Spreads on currency pairs available will vary and are generally tightest during liquid times and widest at times of high volatility or uncertainty.
The innovative Zero Spread option are available for those who require spread constancy to leave stop orders in the book for example
MT4 works on 5 decimal places – EURUSD quote of 1.19813/1.19815, meaning a spread of 0.2 pips is the expectation in normal conditions for all our products.
Standard Lot Sizes and Maximum Order Cap
1 lot volume = 100,000 of the first named currency
So trading 1 lot of EURUSD is to trade €100,000 of USD.
All trades are capped to 0.5 per order. This allows our blulive matrix to mitigate risk using a basic unit of 0.5lots simply because most traders will deploy this maximum size as default. Only available margin restricts total position size. Promoted traders are risk managed seperately and the order cap restriction is removed upon promotion.
Spread Costs & Calculations
Spread cost = (Spread X Position Size)/10,000*
We can look at the market watch window to see the spread, for example EURUSD spread = 1.3 Position size = 1 lot (100,000 units)
Spread Cost for 1 lot = (1.3 x 100,000) / 10.000 = $13.00
* 10,000 Factor = this is because the spread is measured on the 4th Decimal Point. This value always remains constant.
The spread cost is always calculated in the second name currency of the currency pair quoted. In the example above, the spread cost is quoted in USD. As the spread or position size varies, the spread cost will vary.
Swap Rate and Fee Calculations
The swap fee is charged for carrying a position overnight. A forex swap is the difference in interest rates between the two currencies of the traded pair. The calculation will depend on whether the position is long or short.
We can find the swap rate for long and short positions by right clicking the pair in market Watch window and selecting ‘Specifications’
The calculation is then as follows;
Swap = (Pip Value * Swap Rate * Number of Nights) / 10
For example to carry 1 lot of EUR/USD (long)
Mistakes happen, and adverse market moves can cause destabilizing drawdowns on growth curves. Liquid understands this and offers a fresh start by refinancing account balances for the right reasons. This option is not to be used as part of any strategy and is only available on selected plans.