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Question about 1% rule and margins


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  #1 (permalink)
 jamiecassar 
Rochester MN
 
Experience: Beginner
Platform: Oanda
Trading: Micro-FX
Posts: 82 since Jan 2014
Thanks Given: 178
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When I place a spot forex trade for 100 shares, it says margin used $5.00. This is 1% of my $500 practice trade account.

My question is should the 1% rule be applied to my margin, or should it be applied to the $500 in the account?


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  #3 (permalink)
switchmullet
Melbourne, Australia
 
Posts: 5 since Oct 2012
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The 1% rule relates to the amount that you risk on each trade, not your margin..

The distance between your stop and your entry defines the $ risk, and combined with your account size and risk % you can determine how many contracts to trade.


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Last Updated on January 29, 2014


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