Levarage

Okay, I believe this belongs somewhere in the beginners section... I searched and found nothing... if it is already in discussion, please move this their (mods) and direct me to the answer.

I've been trading for a while now, but never bothered with leverage. My trading account have been set up to trade at 100:1>>> for every $100 that I trade, my pip value is $1.

I'm now opening a new account at another broker with a leverage of 200:1, now for every $50 I trade, 1 pip = $1

My Q is:
My risk is 1/2 of the usual....?

I deposit $300 in this account
My Margin is 1/3 of the account = $100
Meaning I have $200 or 200 pips margin @ 100:1,

BUT at 200:1

I deposit $300 in this account
My Margin is 1/3 of the account = $100
Meaning I have $200 or 400 pips margin @ 200:1,

is this correct... so if I keep trading with the same lot size, not increasing my lots because my leverage increased, then it works out better?

Hi All
I'll appreciate it if someone could give me some clarification on this please

fx

You are confused between brokerage leverage and account (or true leverage). Part of the problem is so many people just talk about "leverage" and not specifying what they mean.

It is not relevant what your broker leverage is. If it is 100:1 or 500:1 your risk does not inherently change, all that matters is what position size you have.

Now that you have 200:1 leverage it will only cost you $50 of used margin to buy say 1 mini of EUR/USD instead of $100 used margin on your old account.

Your pip value is staying the same at $1. Your risk is the same as the old account (assuming your stops are the same). The only difference is now you have more unused margin to play with. On your old account you could go say $200 in the hole on a trade until margin call. Now you can go $250 in the hole before margin call.

Thankyou Saskgui

I thought something like that in regards to availible margin... but I now understand it a bit better and will go read up a bit more then on "brokerage leverage and account (or true leverage)."

Once again, tx
fx

Consider asking your broker questions such as these. If you want the best answer, get it from the people your trading your money with.

Good Luck