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Managing your Money : Leverage

  • #21
  • Jun 12, 2011 8:38pm Jun 12, 2011 8:38pm
Thanks for the clarification.
  • #22
  • Jun 16, 2011 11:55pm Jun 16, 2011 11:55pm
Am back again. This time, i have attached an image to illustrate. Its from the FxPro-MT4 platform.

Supposing i want to use 2% of my capital $3000 (that is $60) to enter a trade on EURUSD @ 1.42054. I use a stop loss of 50Pips so that it kicks out @ 1.42554.

Qtn: Considering that i am cornered to include the leverage(1:500) before time, how much do i expect to loose or gain on this particular transaction?
Please show me the math.
Attached Image
  • #23
  • Jun 17, 2011 12:47am Jun 17, 2011 12:47am
Quoting square1
Am back again. This time, i have attached an image to illustrate. Its from the FxPro-MT4 platform.

Supposing i want to use 2% of my capital $3000 (that is $60) to enter a trade on EURUSD @ 1.42054. I use a stop loss of 50Pips so that it kicks out @ 1.42554.

Qtn: Considering that i am cornered to include the leverage(1:500) before time, how much do i expect to loose or gain on this particular transaction?
Please show me the math.
The leverage you have set won't make any difference to how much you're going to lose on a particular trade, if you want to risk $60 on a trade with a 50 pip stop loss you should divide $60 by 50 = $1.20 per pip. As you are on fxpro they don't deal with mini accounts or microlots so it would be $1 per pip which is 0.10 lot size on fxpro's platform.
  • #24
  • Jun 17, 2011 1:19am Jun 17, 2011 1:19am
Ok. Thanks. I asked FxPro and they said they actually gives minilots upto 0.1 which is $10 per pip.

This is what i had in my head. I dont know whether its correct.

No of Lots= [Amount Size * % Risk]/[No of Pips between ask price and SL * dollars/pip]

No of lots=[$3000 * 0.02]/[50*$10(1 pip on standard lot)]

No of lots=0.12 lots.

If 1 lot = $10
0.12 lots= 0.12*10 ($1.2 per pip)

Therefore 50pips loss would be what?
A 50pips profit would be what?

Is it the same(50 * 1.2)= $60????, isn't this where the leverage comes into play?
  • #25
  • Jun 17, 2011 1:30am Jun 17, 2011 1:30am
Quoting square1
Ok. Thanks. I asked FxPro and they said they actually gives minilots upto 0.1 which is $10 per pip.
Yes they deal in minilots which is 0.1 $1 per pip. They don't deal in microlots so you couldn't put on 0.12 you would have to put on 0.1 which is $1.
Quote
This is what i had in my head. I dont know whether its correct.

No of Lots= [Amount Size * % Risk]/[No of Pips between ask price and SL * dollars/pip]

No of lots=[$3000 * 0.02]/[50*$10(1 pip on standard lot)]

No of lots=0.12 lots.

If 1 lot = $10
0.12 lots= 0.12*10 ($1.2 per pip)

Therefore 50pips loss would be what?
A 50pips profit would be what?

Is it the same(50 * 1.2)= $60????
Yes exactly the same, whatever you're risking you are also gaining if it wins by the same amount of pips.

Just remember as I said, to divide your risk by the stop loss and then round down to the nearest minilot exactly like you've done there.

The only difference leverage makes is the size of trade you are allowed to put on, not the amount you risk on each trade. The amount of margin used to put that trade on in the first place, but if you have a stop loss and know the risk you want to use, thats really all you need to worry about.

Leverage is used like this: If you have 1:1 leverage you need $10,000 of margin (roughly) to put a $1 per pip trade on. If you have 1:100 you need $100 roughly and if you have 1:500 you need $20 roughly. Thats where the difference lies. So the danger comes if you have a 1:500 account and you put on a large trade, but if you stick to what you've just said there and thats 2% risk per trade, thats what you risk, whatever the leverage.
  • #26
  • Jun 17, 2011 1:47am Jun 17, 2011 1:47am
Thanks. I want to put it in practice.
  • #27
  • Jun 17, 2011 1:48am Jun 17, 2011 1:48am
Quoting square1
Thanks. I want to put it in practice.
The best way to do it is open a few demo accounts with different amounts of leverage each time, and watch the amount you earn or lose per pip and the amount in the margin used figure once a trade is open. You will soon get the idea.
  • #28
  • Jun 17, 2011 2:56am Jun 17, 2011 2:56am
the government should just gtfo.

if there is one thing i believe it is that the world as it is currently promotes idiocy and stifles intelligence. put a warning label on this. ban that. tax this so it costs more.

certain governments seem to want to wrap everyone into a nice tight ball of cotton wool padded safety and comfort, and then suck the dollars right out of everyone's bank account. the more they protect the stupid the more they allow them to flourish and breed.

i say make 1,000,000 : 1 leverage available. people will learn their lessons faster if they are given the ability to chop off their own heads.

no matter what the government does, and no matter how much they try to coddle their sheeple, i have no doubt that time and time again the idiots of this world will continue to amaze everyone with their creative ways in which they implode themselves. put an idiot in a padded room with nothing else inside and they will find a way to retard themselves further.

Congratulations ScalaFX for coming out of the closet!
  • #29
  • Last Post: Jun 17, 2011 3:04am Jun 17, 2011 3:04am
Quoting nubcake
the government should just gtfo.

if there is one thing i believe it is that the world as it is currently promotes idiocy and stifles intelligence. put a warning label on this. ban that. tax this so it costs more.

certain governments seem to want to wrap everyone into a nice tight ball of cotton wool padded safety and comfort, and then suck the dollars right out of everyone's bank account. the more they protect the stupid the more they allow them to flourish and breed.

i say make 1,000,000 : 1 leverage available. people will learn their lessons...
Don't mince your words nubcake, tell us what you really think

Totally agree though.
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