Forex and lot sizes and margin

[Nareik]

Ok so im going to be opening an account soon. Probably £500 to give my first live trading a try. I want to know if i trade with a £500 account, and say for example i open a trade £1 per pip £50 stop loss. If i hit my stop loss will i only lose 50 pounds? Because when trading demo accounts even if im only down £10 ill be down like £1000 in margin. I dont quite understand why and just want to know if ill actually owe more money than im losing when trading. Thanks.

[TheYOLO]

Hello Nareik!

With a £50 stoploss (SL) you are risking 10% of your account. Maybe you are willing to risk that much, but if you are just getting started you are better off risking 2-3%, max 5%. The pros also don't risk that much per trade as I've learned thru reading some books.

I'm also having a small account and trading currencies on the mini lots is hard. Wish IG would introduce nano lots!

Regarding margin IG will subtract the required margin from your account balance so you have to take that into consideration. The platform will issue a margin call (and close your position) on your position if margin requirement + loss exceeds your account balance (I think). So with a small account that will happen as there is little cash left in the account after margin requirement. The margin requirement will be added back in when the position is closed. Profit or loss still apply.

[Smormad]

You are right, 10% risk is too much...