Question about leverage & lot size | Forex Factory

Options

Permalinks
Print Thread

Similar Threads

Which would you prefer: increasing lot size or TP size? 24 replies

At what lot size/account size do you have scale issues? 39 replies

Best leverage and lot size for $1000 deposit 54 replies

Lot size, contract size, max position ? 1 reply

BUY run profit 1 lot, SELL LIMIT 2 LOT down again n BUY 1 lot - EA Reqd 5 replies

Question about leverage & lot size

  • #1
  • First Post: Jan 8, 2007 4:30am Jan 8, 2007 4:30am
Hi,

Ok let's say I have a mini account with $2,000
Leverage is 200:1
I trade GU 10,000 quantity ($100)

how much will each pip give me? I get confused everytime i see 200:1 for some reason
Trade what you see, not what you think.
  • #2
  • Jan 8, 2007 6:26am Jan 8, 2007 6:26am
A mini account is $1 per pip. Leverage determines how much margin you have to put up to trade that contract. In your case it should be $50 which is 1/200th of a mini contract ($10,000)
  • #3
  • Jan 8, 2007 6:58am Jan 8, 2007 6:58am
Quoting philmcgrew
A mini account is $1 per pip. Leverage determines how much margin you have to put up to trade that contract. In your case it should be $50 which is 1/200th of a mini contract ($10,000)
Correct me if I'm wrong (I've never traded live), but that means that he can sustain a drop of only 50 pips in this trade, because once he's trade will be 50 pips down his IB will close his deal (since the IB will not risk HIS money on this trade).
Right?
  • #4
  • Jan 8, 2007 7:19am Jan 8, 2007 7:19am
Quoting cre666
Correct me if I'm wrong (I've never traded live), but that means that he can sustain a drop of only 50 pips in this trade, because once he's trade will be 50 pips down his IB will close his deal (since the IB will not risk HIS money on this trade).
Right?
That is not correct. He has to put aside $50 as good faith. He is still welcome to lose the remainder of his accout in pursuit of profit.
  • #5
  • Jan 8, 2007 9:36am Jan 8, 2007 9:36am
Quoting philmcgrew
A mini account is $1 per pip. Leverage determines how much margin you have to put up to trade that contract. In your case it should be $50 which is 1/200th of a mini contract ($10,000)
Thank you very much
Trade what you see, not what you think.
  • #6
  • Jan 8, 2007 2:44pm Jan 8, 2007 2:44pm
Quoting philmcgrew
That is not correct. He has to put aside $50 as good faith. He is still welcome to lose the remainder of his accout in pursuit of profit.
Sorry for the bother, I just need to set it straight for one and for all,
If I use a 1:100 leverage, (and lets just assume for the sake of urgument that I make a trade of 100$) that means that for every $ I put, the broker puts 999$, so I can make a purchas of 100$ with only 1$. so far so good.
When my pips will go down (and they will, at least unless I'll be able to get proper aducation on the matter) the first 1% of the loss is all mine (1% is translated to 10 pips, am I right?). after I've lost it, the broker must get out of the deal, since the rest 99% of the funds are all his/hers...
Or will he deduct it from the total amount of equity and stop the feast only once my account runs dry (looking at it globally, not in the "per trade" manner I thought he would)?
  • #7
  • Jan 8, 2007 3:41pm Jan 8, 2007 3:41pm
Quoting cre666
Sorry for the bother, I just need to set it straight for one and for all,
If I use a 1:100 leverage, (and lets just assume for the sake of urgument that I make a trade of 100$) that means that for every $ I put, the broker puts 999$, so I can make a purchas of 100$ with only 1$. so far so good.
When my pips will go down (and they will, at least unless I'll be able to get proper aducation on the matter) the first 1% of the loss is all mine (1% is translated to 10 pips, am I right?). after I've lost it, the broker must get out of the deal, since the rest 99% of the funds are all his/hers...
Or will he deduct it from the total amount of equity and stop the feast only once my account runs dry (looking at it globally, not in the "per trade" manner I thought he would)?
Just to make sure we are on the same page a couple of assumptions must be discussed: First let's talk in US Dollars, let's asusme you are trading the EURUSD (since 1 pip = $1), let's assume you have a mini account where 1 lot is a $10,000 contract, and for the record assume 100:1 leverage (as you suggested) and, let's assume you have a $1000 account (since you suggested 1% is 10 pips which is $10 and 10/10,000 is 1%).

When you buy the EURUSD your broker will set aside $100 margin. You still have $900 "tradeable (usable) margin." This is yours to lose and no broker intervention will come into play until you've bled your account down to the initial margin set aside. In other words, you are welcome to lose $900 of your own money, after which, your broker will liquidate your position and give you $100 which i suggest you use to drink heavily. If you remotely approach a margin call in forex you are seriously doing something very wrong.
  • #8
  • Last Post: Jan 8, 2007 5:24pm Jan 8, 2007 5:24pm

  1. Thank you very much for your help.
  2. I was just worried that the fact that I put in only 1% of the deal, means that there will be a broker "stop loss" that will make me cash in at 10 pips or so. Glad to learn ut isn't the case.
  3. If I'll ever lose 900$ on one trade, there will be no whiskey left for miles around after I'll finish drinking :-), you can join me on my expense, if you'll settle for somthing else, after that kind of a loss, the tab is negligible.

0 traders viewing now