Lot Size Guide For New FXCM Margin Requirements
By Mark So on January 26, 2015
Lot Size Guide Based on FXCM Margin Requirements
If you are using FXCM, as of January 2015 they have increased their margin requirements per 1K lot. FXCM announced that this is “temporary” but we must assume that this will be the “new normal” for a while and we must make adjustments to our trading until this is re-adjusted again.
To help out all members, please see the revised Lot Size Guide based on how conservative or aggressive of a trader you are.
The first guide does not include CHF pairs. I personally recommended that you abstain from trading any CHF pair as margin requirements have soared to as much as $200 / 1K lot for the EUR/CHF and approximately $100 / 1K lot for the other CHF pairs. However if you really want to trade with CHF, then scroll down to the lower part of this tutorial for details on that. But first, here’s how to trade without CHF pairs:
Please note that with the new Margin requirements, our leverage will be reduced significantly from 1:200 to roughly 1:35. To compensate, you will have to reduce your aggressiveness and/or increase your account balances accordingly
How to use this guide
1. When trading, do not include any CHF pair in the mix.
2. Only follow the lots recommended based on your risk appetite.
For example, if your balance is between 4,000-4,999 and you are a “moderate” risk taker, it is recommended that you trade up to only 15 Micro Lots or 10% of your account balance.
What should I follow, the Software recommendation or this Lot Size Guide?
You must follow both. So please read this carefully and diligently. Here is what you need to do moving forward:
The software recommends 21 currency pairs to trade. If there are CHF pairs in the mix, please just disregard them and DO NOT trade any of them.
For simplicity, let’s assume in this example that there are no CHF pairs in the mix:
Your balance is $5,000 (look at step 3 in the screenshot on the left) and you are willing to risk 10%. The calculator recommends taking 21 trades.
Look at the lot size guide and find your balance of $5,000 then pair it with the “moderate” column of 10%. The guide says 19.
So, only trade with 19 instead of 21.
Please remember, in this new environment, we now need to pay closer attention to the Margin requirements aside from stop losses in order to safeguard our funds.
Remember, do not exceed the recommended lot size recommendations based on this guide because doing so increases the possibility of margin calls and we do not want that.
Aside from this change and additional filtering, everything will be as it was before, i.e. Please continue to follow the recommended Stops and Limits that I continue to provide, follow the recommended times to enter and exit every time I trade.
For those who want to still trade with CHF pairs, please follow this table:
Please note that with CHF in the mix, our leverage will be reduced even more, typically from 1:200 it will now be 1:10. To compensate, you will have to reduce your aggressiveness and/or increase your account balances accordingly
How to use this guide
1. When trading, you can include any CHF pair in the mix.
2. Only follow the lots recommended based on your risk appetite.
For example, if your balance is between 4,000-4,999 and you are a “moderate” risk taker, it is recommended that you trade up to only 8 Micro Lots or 10% of your account balance*.
What should I follow, the Software recommendation or this Lot Size Guide?
You must follow both. So here is a typical trade recommendation from the Unlitrader software:
The software recommends 21 currency pairs to trade.
Your balance is $5,000 (look at step 3 in the screenshot on the left) and you are willing to risk 10%. The calculator recommends taking 21 trades.
Look at the lot size guide above and find your balance of $5,000 then pair it with the “moderate” column of 10% the guide says 10.
So, only trade with 10 instead of 21.
Please remember, in this new environment, we now need to pay closer attention to the Margin requirements aside from stop losses in order to safeguard our funds.
Do not exceed the recommended lot size recommendations based on this guide as doing so increases the possibility of margin calls.
3.Please continue to follow the recommended Stops and Limits that Mark continues to provide every time he trades.
For any questions or concerns you may have, please post a comment below and I will answer you within 48 hours or less.
Monsterpips to All!
-Mark