Leverage used for ExperSignal

tom

Administrator
Staff member
The ExperSignal trade alerts use a $25,000 unit for calculating the margin and risk.

The goal is approximately 10:1 leverage as currencies move in much small increments than other instruments like the SPX.

For the GBPUSD, I trade the 6B futures contract. This represents 62,500 GBP. Priced in USD it is currently $83,444 per contract. To achieve 10:1 leverage, I need:

$250,000 / $83,444 = 2.996 contracts (rounded off to 3)


For the EURUSD, I trade the 6E futures contract. This represents 125,000 EUR. Priced in USD it is currently at $148,863.

$250,000 / $148,863 = 1.679 contracts (rounded up to 2)


If you trade the forex cash market, just take your USD balance and multiply by 10 to get the amount of currency you need to trade.


You can adjust the number of contracts you trade based on your account net liquidation value (NLV). Essentially you are scaling the number of contracts based on the standard unit of $25,000 that I base the margin and risk on.

GBP
NLV / $8,333 rounded down
= number of contracts to trade. ($8,333 = $25,000 / 3 contracts per unit)
Examples
$45,000 NLV / $8,333 = 5.4 rounded down to 5 contracts
$89,000 NLV / $8,333 = 10.7 rounded down to 10 contracts
$210,000 NLV / $8,333 = 25.2 rounded down to 25 contracts

EUR
NLV / $12,500 rounded down
= number of contracts to trade ($12,500 = $25,000 / 2 contracts per unit)
Examples
$45,000 NLV / $12,500 = 3.6 rounded down to 3 contracts
$89,000 NLV / $12,500 = 7.1 rounded down to 7 contracts
$210,000 NLV / $12,500 = 16.8 rounded down to 16 contracts

This is how I'm going to determine the number of contracts for the accounts that I personally trade.
 
Top