All language subtitles for [English (auto-generated)] Forex Leverage_ 90% Of Beginners Make This Mistake When Trading With Margin... [DownSub.com]

so

we have all seen this message before

right whenever you go to place a trade

you have your entry stops targets the

amount of units you want to purchase of

that specific currency

all in you click the button buy or sell

and something pops up on your screen

that says

insufficient margin this is a confusing

message for a majority of traders

because

let's say you have a thousand dollar

account you're trying to risk 100 bucks

and you're like

i should be able to risk 100 on a

thousand dollar account right

not necessarily depending on a couple of

different factors so if you've ever seen

that message before and been confused or

even just curious about what it means

why it happens and how you can avoid it

then today's video is for you

because that's what we're going over in

this video and by the end of it you will

no longer be confused

about why that happens and you'll also

have a good idea of how to avoid that

happening

in the future so if that sounds good

these are two things for me go ahead and

click that like button

go ahead and subscribe if you are new if

you are already a subscriber

welcome back let's go ahead and get

started so for this first scenario let's

say you have a 100

trading account just to make math easy

let's say you have a 100

to one leverage on that account

and what this is going to do is give you

10 000 units of buying power the way we

come up with that number

is just 100 times 100 is 10 000 so

therefore we have

10 000 units

i'm gonna put bp this just stands for

buying power so we have

ten thousand units of buying power and

this is the first mistake i see so many

beginners making

they'll have this situation hundred

dollar account hundred to one leverage

they'll be on the euro dollar five

minute chart like we are right now

they'll be trying to place a trade that

has a five pip stop loss

doesn't matter what the target is and

they want to risk

ten dollars they're thinking to

themselves and maybe you're thinking

right now

ten dollar risk on a 100 account i

should be able to do that if i want to i

don't understand

why this would be a trade i can't place

right if that's what you're thinking

right now

let me explain a little bit further

about the way margin works

you have ten thousand units of buying

power right now with this account size

and leverage and you're trying to place

a trade

with a five pip stop loss and a ten

dollar risk

margin has less to do with what you're

trying to risk

in terms of i want to risk ten dollars

on 100 account and more to do with the

amount of units

you can control at any one given time on

your entire account

which in this case would be 10 000 units

and if we're trying to have a 10 stop

with a five pip stop what does that mean

we are attempting to do well we know

hopefully you know and if not

here's a little lesson for you a mini

lot or 10 000 units of currency

is normally equal to

one dollar per pip

is what that is normally worth so with

this being the case

if we are trying to have a five pip stop

loss

equal ten dollars of risk how many units

of this currency will we have to buy

for this situation to play out we will

need

all we have to do is multiply this by

two right we need this to be two dollars

per pip

because in order to have a ten dollar

risk on five pips of stop loss

we need two dollars per pip to equal

that ten dollar risk right

so if 10 000 units is one dollar per pip

then 20 000 units

is what we need to purchase in order to

make this trade happen

and the reason we get the message that

says

insufficient margin is because you

cannot hold

20 000 units of any currency or any pair

while you only have 10 000 units of

buying power does that make sense so

this is the first reason your broker

will say

no to you every time you try to make

this trade

the reason they say no is because you

are attempting

to use 20 000 units on an account where

you can only have 10 000 units

of buying power and what is the cause of

all this

your stop-loss being too small the

reason you're you're having this

situation is because you have too small

of a stop-loss

and you're trying to risk too much money

with that small stop-loss so let's talk

about

way number two that's the first way that

you're going to get that

message of insufficient funds

insufficient margin whatever your

brokerage calls it

is because you're trying to hold whether

your risk remember our risk right now

we're still we're trying to risk only

ten dollars so in most beginners heads

it makes sense that i should be able to

risk ten dollars on a hundred dollar

account but the other two steps

are to find out how many units i have to

hold

in order for this ten dollar risk to

exist and in this case

that would be twenty thousand units

which your brokerage will not allow

if you can only have uh 10 000 units of

buying power

so hopefully that made sense if it

didn't watch that a couple of times i'm

gonna try to make this into like a

pretty short video the concepts

are just pretty simple math so if you

have to watch it a couple of times but

right now i want to dive into the second

way

you're going to see that message of

insufficient margin let's go ahead and

delete all this

and let me go ahead and write out our

account values and stuff instead of

making you watch me

i'll just fast forward with the power of

editing that will happen right now

so we have our same hundred dollar

account hundred to one leverage and ten

thousand units of buying power

this ten thousand units is across your

entire account

what i mean by that is ten thousand

units on one position

okay or you can have ten thousand units

on five different positions and all of

them just be

two thousand unit positions hopefully

you understand that as well

a lot of traders think ten thousand

units means that they can

risk ten thousand units or purchase 10

000 units on every trade they place but

that's not the case

so let's dive into another scenario

let's say this time

you are thinking like a semi-normal

individual and instead of risking 10

of your total account value which is

terrible risk management you decide

you're going to risk

two dollars on this specific trade same

five pip stop loss so at this point what

do you need

simple math comes into play again i'm

going to avoid that simple math for you

but all you have to do

is divide five by your two dollars per

pip and in order to get that

what we end up with is 40 cents

per pip would give me a two dollar stop

loss

a two dollar risk on a five pip stop

loss

so 40 cents what do i need

in terms of the amount of units i need

to purchase in order to equal 40 cents

per pip

well a micro lot which is 1 000 units of

currency

is equal to 10 cents per pip

on a majority of pairs this is a rough

estimate some pairs are a little bit

different don't worry about that right

now

that's a whole other video but 1 000

units for currency

for the most part most of the time is

equal to 10 cents per pip

so all that means is that we would need

4 000

units of currency to equal our zero

point

40 cents per pip or to equal our

five pip stop with a two dollar risk

right

so everything should play out okay here

i should be able to place this trade but

what if you try to place

this exact trade and you see that same

message

of insufficient margin what does that

mean

well that means the likely scenario is

that you forgot you were in two other

positions

let's say one of them was the uj

or dollar yen and on the dollar yen

you're currently in that trade with

000 units you forgot about that you're

also in the g

u with let's say 2 000 units is your

position

size so with this being the case you

currently have

7 000 units that you are

involved in the market with your

position currently in your entire

account

is worth 7 000 units therefore you only

have

left simple math here your 10 000 units

you had at the beginning right

let's do this math if you have 7000

there then your 10 000 units

that you had of buying power

minus your 7 000 units you're currently

involved with

in the market would mean what means you

only have

3 000 units of buying power of buying

power so when you try to place a trade

with 3 000 units of buy with

excuse me when you try to place a trade

with 4 000 units

and you only have 3 000 units of buying

power

your broker yet again it will never let

you place that trade

and that is the reason you're seeing

insufficient funds pop

up every time you try to place a trade

like this maybe it just slipped your

mind that you're involved in a couple of

other trades

maybe you didn't understand exactly how

margin worked in terms of

if you're already in 7 000 units worth

of trades

you can't still get 10 000 units worth

of buying power you're going to be

limited then to only 3 000 units of

buying power

because you're already involved in the

market with open positions worth

7 000 units so that would be the second

reason

you would end up getting that message

that says

insufficient funds when trying to place

a trade so now that we have those two

things

covered and again i know that that was a

lot of math but most of it's really

simple math so

if you just kind of went over your head

any of it did

i totally understand as a beginner all

that would have went completely over my

head as well

but watch this video two or three times

just that front portion of it

and it should make a lot more sense you

should be able to get that within two to

three times

watching it but right now let's talk

about how you can avoid that situation

so now we know

why we get the message of insufficient

margin how can we avoid it

well the first way you can avoid it is

going to be

to risk less so let's say do the same

scenario and i won't put you through

watching me draw it but let's do the

same scenario

let's say we're in the same scenario 100

account 101 leverage meaning 10

000 units of buying power at this point

let's say we have no open trades and you

have that same trade

five pips of stop loss and you say okay

i only want to risk

two dollars which is a decent risk

management plan depending on your risk

tolerance

two percent of your total account value

on the specific trade we've already done

this math so we don't have to that just

means

you would only need four thousand

units in order to place this trade your

broker would absolutely allow that if

you had no

other open positions and this was your

account

and your your leverage if you had 100

account 101 leverage

10 000 units of buying power your

brokerage would 100

let you place this trade that's supposed

to be a check mark i know it doesn't

look like one

but your brokerage would let you place

that so that's the first way to avoid

getting an insufficient fund is one keep

up with the amount of trades you already

have in your account

if you're at zero you obviously have

your 10 000 units of buying power

so just be sure that the position size

you're

you're going to place on that trade is

not higher

than the buying power you have based on

your account size

and your leverage the next way is to

stop trying to trade a five-minute chart

if you don't even understand margin

this is something i see so many

beginners do it drives me crazy

because i have fell into the trap myself

that's why it drives me crazy i lost so

much money doing this i was so confused

trying to trade tiny time frames five

minute chart one minute chart

when i first started because i didn't

even understand margin so i was out here

trying to risk

ten dollars per trade on 100 account

like i just showed you

and i would be either margin called or

have insufficient funds

for half the trades i tried to place and

i could never figure out why well guess

why

because you're trading on a five minute

chart and with a five pip

stop loss that's going to eat up margin

really quickly because the smaller the

stop loss

the more units you need in order to

create

that two dollar risk that 10 risk in

order to create whatever risk management

plan you have

the smaller the stop the more units

you'll need for example

and the way to fix that is let's say

instead of trading a five minute chart

you jumped out to a four hour

chart and on a four hour chart instead

of five pips

this stop loss was 50 pips same

situation i'll draw it out just so

you'll have it

to look at same 100 account 100 to 1

leverage

10 000 units of buying power now let's

say you were going crazy with a hundred

dollars because you really didn't care

if you lost it

and you want to risk 10 on this trade

well if that's the case

do you think you can actually do it now

with a 50 pip stop instead of a five pip

stop

let's take a look with a 50 pip stop

loss if we want to risk

10 then

how much does each pip need to be worth

that would mean that each pip would need

to be worth

20 cents

so if each pip needs to be worth 20

cents we already discussed this

one micro lot is equal to 10

cents per pip

and how much is a micro lot 1 000 units

of currency so at this point we would

need

2 000 units

in order to place this trade so now just

because we increased

the size of the stop loss we can

actually place this trade and still have

8 000 units left over because we're just

taking that 2 000 units

off of our 10 000 units of buying power

so this is another way to avoid the

insufficient margin situation

is by doing nothing more than increasing

the time frame you're trading on

increasing the size of your stop loss

because the bigger the stop loss

the less amount of units you're going to

need in order to equal

that 10 risk or whatever

your risk is you can by the way before i

end the video you can

exchange these numbers for any number at

all and the equations are still exactly

the same

again if there was something here you

didn't understand rewind the video and

check it out i just wanted to get this

out to you guys really quickly

didn't happen to be that quickly looks

like i'm above 15

minutes at this point but i tried anyway

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