Jump to content

leverage calculation & formula


Guest

Recommended Posts

Hi

Recently started with IG Index. Wanted to place a bet on a $10 share, at $100 a point. I had deposited $10,000 in my account to fund this bet. Since you can't go into negative equity this limits my risk to losing $10K.

When I tried to place the bet I had an error saying something along the line of "the exposure was too high for the margin? blah blah blah"

Consequently I manually adjusted the bet down incrementally until I got to $15 a pip at which point the IG platform allowed me to place the bet. The price moved in my favour by 70 points and I made a profit of $1,050 based on the capped bet of $15 per pip. But I should have made $100 x 70 = $7,000. So the cap cost me $6,000 !

This cap on leverage is incredibly costly, annoying and I can't see how it is calculated?

I know people will say the cap is there to protect the small investor, but if I calculate what I can afford to lose and bet accordingly I do not need a nanny state limiting my bets. Last time I checked there was no one policing bets on horses where you can hapilly stick £10K on luckyboy to win at Cheltenham?

Question: please can you give an example how to calculate the maximum bet based on a formula which includes the affect of levarge cap restrictions.

Question: What effective ways are there to increase your leverage? i) deposit more money in your account? ii) open an international spread bet account where ESMA regulations don't apply? Etc etc? Please provide details.

Thanks

Z

Edited by ZeliZeli
typo
Link to comment
On 07/08/2020 at 08:50, ZeliZeli said:

Hi

Recently started with IG Index. Wanted to place a bet on a $10 share, at $100 a point. I had deposited $10,000 in my account to fund this bet. Since you can't go into negative equity this limits my risk to losing $10K.

When I tried to place the bet I had an error saying something along the line of "the exposure was too high for the margin? blah blah blah"

Consequently I manually adjusted the bet down incrementally until I got to $15 a pip at which point the IG platform allowed me to place the bet. The price moved in my favour by 70 points and I made a profit of $1,050 based on the capped bet of $15 per pip. But I should have made $100 x 70 = $7,000. So the cap cost me $6,000 !

This cap on leverage is incredibly costly, annoying and I can't see how it is calculated?

I know people will say the cap is there to protect the small investor, but if I calculate what I can afford to lose and bet accordingly I do not need a nanny state limiting my bets. Last time I checked there was no one policing bets on horses where you can hapilly stick £10K on luckyboy to win at Cheltenham?

Question: please can you give an example how to calculate the maximum bet based on a formula which includes the affect of levarge cap restrictions.

Question: What effective ways are there to increase your leverage? i) deposit more money in your account? ii) open an international spread bet account where ESMA regulations don't apply? Etc etc? Please provide details.

Thanks

Z

The regulator (ESMA) sets the margin (leverage) limit so to only way to avoid it is to open an account outside of ESMA's reach, that would have been Australia as choice but their regulator is set to follow ESMA's example and lower leverage too.

Link to comment

Hi, please use glowing yellow in your next question, it hurts way more to the eyes.

This is how you can calculate the PL for a position.

image.thumb.png.84c0c47be52776e6e66ab34c81cd3d67.png

To calculate the required margin for a trade you need to look at the market margin factor, i.e Wall Street

image.png.49c18106f9f03d15a4d507bfbd003449.png

You will need to multiply the side price by the margin factor and by the bet size

image.png.ffe7e8d1d0ca07070339e616c312d211.png 

 

  • Great! 1
Link to comment

I am still trying to understand how profits/losses on trades are calculated because I am not sure about some of the expenses that I am incurring... For example, I was recently charged about A$49 for "Daily FX Interest for 3 day USD/JPY converted at 0.0133" - an someone please explain to me what this means and how it is calculated?

Link to comment

Create an account or sign in to comment

You need to be a member in order to leave a comment

Create an account

Sign up for a new account in our community. It's easy!

Register a new account

Sign in

Already have an account? Sign in here.

Sign In Now
  • General Statistics

    • Total Topics
      21,632
    • Total Posts
      91,899
    • Total Members
      41,911
    • Most Online
      7,522
      10/06/21 10:53

    Newest Member
    PBEE
    Joined 25/03/23 10:02
  • Posts

    • Charting the Markets: 24 March The FTSE 100, DAX 40 and Nasdaq 100 slide on renewed banking woes while EUR/USD, EUR/GBP and GBP/USD drop as the US dollar, gold appreciate due to flight-to-quality flows. Crude oil and copper tumble on recession fears.  Axel Rudolph FSTA | Senior Financial Analyst, London | Publication date: Friday 24 March 2023         This is here for you to catch up but if you have any ideas on markets or events you want us to relay to the TV team we’re more than happy to.  
    • Market Breakdown | WTI Oil, EURUSD, GBPNZD, EURAUDHere are the updates & outlook for multiple instruments in my watchlist.1️⃣ WTI Oil daily time frame️The market is trading in a long term bearish trend .After the last sharp bearish movement, the market is steadily recovering.Ahead, I see a major horizontal supply area.Probabilities are high, that the next bearish wave will initiate from there.2️⃣ EURUSD daily time frameAfter a breakout of a solid daily resistance, the market is preparing for its retest.Watch carefully the underlined zone and look for buying opportunities from there.3️⃣ EURAUD weekly time frameThe pair is currently approaching a weekly horizontal resistance cluster.Taking into consideration, that the pair is quite overbought, probabilities will be high to see a pullback from that4️⃣ GBPNZD daily time frameThe pair is currently retesting a broken neckline of an ascending triangle . As we discussed earlier, the trend line of a triangle and its neckline compose a contracting buy zone now.Chances will be high that the next bullish wave will initiate quite soon.For Additional confirmation use: Divergence Indicators
    • #CHFJPY: Classic Bearish Setup 🇨🇭🇯🇵   🔻CHFJPY has nicely respected a confluence zone based on a horizontal 4H resistance and a 0.5 retracement of the last bearish impulse.   The price formed a double top pattern on that and broke its neckline.   Probabilities will be high that the pair will drop lower soon. Goals: 141.172 / 140.363  
×
×
  • Create New...