Margin Calls

For Oanda FX.

Assuming trading in EUR/GBP.
Short 200 units at 0.72013.

Position Value = 200 x 0.72013
= 144.026 GBP

Assuming GBP/USD sell at 1.99266,
Convert to USD = 144.026 x 1.99266
= 286.9948 USD

Assuming leverage 20:1,
leverage = 1/20 x 100 = 5%

Margin used = 5% x 286.9948
= 14.3497 USD

Oanda requires that: Margin Used/2 < style="font-weight: bold;">Where should I put my Stop Loss?
You will need to know how much does 1 pip equal?

Assuming I short 200 units, each pip costs +
200 units x .0001 (for Japanese Yen it is 200 x .01) = 0.2 GBP
Assuming GBP/USD sells at 1.99266
Convert to USD,1 pip = 0.2 x 1.99266
= 0.0398 USD


Assuming you have USD 40 Net Asset Value, how many pips can you lose before a Margin Call is triggerred?

Answer:
40/0.0398 = 1005 pips

Therefore, theoretically, you can place a Stop Loss 1005 pips away from your entry point!
However that would wipe out your USD 40 capital.

Let's say we only want to use USD20 for Stop Loss, how many pips can that cover?
Answer:
20/0.0398 = 502 pips

Please also remember that the Net Asset Value dynamically decreases when the Unrealized P & L increases. So if you plan to risk USD10 for Stop Loss, you should minus USD20 fromt he present Balance in your account and see if there is sufficient fund left!

Online Google Spreadsheet

http://docs.google.com/?hl=en#

Lessons From CHF/JPY Pair

I was trading 1 minute candlesticks.

I entered a short position at 11.04 am.

Immediately the price shot up 27 pips in a steep climb until it hit the peak at 11.36 am !

I had a stop above my short position, but I had to adjust the stop at least 6 times to keep it
at a constant distance of 20 pips above the climbing peak. If I had not adjusted it, I would have exited earlier and lost 20 over pips.

LESSON: Make sure you have a very wide stop loss, preferably at least 20 pips above the highest high (if selling short) and 20 pips below the lowest low (if buying long).

So far, in all my previous trade, all of my lost trades were because of very narrow stops.

The price only came down to my sell position at 2.40 pm - i.e. 3 hrs 37 mins from my market entry point. Once a confirmed candlestick closed below my short position, I immediately adjusted my stops just below it - to lock in the profits (although it wasn't much).

I adjusted the stop loss downwards one more time to lock in more profits as another candlestick began its decline. The price immediately shot up and triggered my stop and i earned 3 pips which translates to about 3 cents.

I know it's not much, but this seems to be quite a promising formula.

LESSON: Patience - when the price goes against you, increase your Stops and wait. If you have to leave your PC, put a narrow Take Profit close to your entry point.

LESSON: Don't be greedy - once the price surpasses your entry point and you are already profitting, adjust your Stop to lock in the profit. Continue to adjust the stops little-by-little. If the candlestick hits and activates the stop - so be it. You would already have profitted!

GBP/CHF Pair - Lessons Learnt

I lost about 33 pips - entered short by selling 100 units based on RSI oversold (below 20% criteria). It was also within the lower Bollinger Band.

Mistake:

1. It was not well outside Bollinger band. Also the there was no rising candlestick which
cuts upwards through the Bollinger band.
LESSON: Strictly use Limit Entry only to ensure that entry point is exactly where the
candlestick traverses the Bollinger band.

2. I shorted when there was just a series of panic selling - this could have been a breakout
from ranging
LESSON: Do not enter after a series of panic selling or manic buying.

3. I put a large stop - more than 30 pips from my entry point and but not lower than the lowest
low. I should have put at least 10 pips below the lowest low. After 1 hr 40 mins the price surpassed my entrypoint. If i had put large stops, i would have been profitable.
LESSON: Put at least 20 pips below the lowest low - since the trading started. The lowest low may be 50 pips away from your opening position - so be it. Have Guts! A ranging market will always come your way eventually - be Patient!


Other Lessons Learnt (From Other Pairs)
LESSON: Make sure the pair is ranging.
LESSON: Preferably choose low-risk pairs (lower interest rate differentials)

Happy Trading

Interest Rates

From Easy Forex

From DailyFX

From FxStreet

Range Trading

Trading Trend or Range?

Different Day Trading Strategies

Scalping

Range Trading Guide - FXCM

High Risk / Higher Reward Currency Crosses

Currency Pair	Central Bank Rates (in basis points)	Interest Rate Spread (in basis points)	12-Month Trading Range (in pips)
AUD/JPY	AUD - 550 / JPY - 0	550	1000
GBP/JPY	GBP – 450 / JPY - 0	450	1600
GBP/CHF	GBP – 450 / CHF - 125	325	1950
EUR/JPY	EUR – 250 / JPY - 0	200	1150

Low Risk / Lower Reward Currency Crosses

Currency Pair	Central Bank Rates (in basis points)	Interest Rate Spread (in basis points)	12-Month Trading Range (in pips)
EUR/GBP	EUR – 250 / GBP – 450	200	550
EUR/CHF	EUR - 250 / CHF – 125	125	603
CHF/JPY	CHF - 125 / JPY - 0	125	650

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