Leverage

Hi guys !! i wanted to know that can i trade a mini lot with just 500 USD having a 1:1 leverage??

A mini lot is 10,000 units of whatever you are trading, so no 1:1 leverage will not do. Remember a mini lot is different than a micro lot which is only 1000 units. So to trade even $1000 USD(1 microlot) with $500 USD, you will need at least 1:2 leverage. As a reasonable rule - don’t trade more than a mini lot per $1000 worth of account value. So with 500 USD, I would not trade more than 0.05 lot size.(that’s half a mini lot, or 5 micro lots) Of course its up to you to develop a trade plan with the amount of risk you’re willing to take. Since you ask this question - i presume you are starting out. If that’s the case, it never hurts to take it easy and trade very small as you begin. If you are day trading - set a daily loss limit that if you breach, you must quit trading for the day. One serious problem most beginners face is the need to get a loss back immediately. If you are trading with much leverage, you have the power to blow up all your money fast. The number one beginner mistake in my opinion is going too big too soon. Be warned!

Thanks now i understood,and btw can you give me a example of day trading plan with 500 USD involving risk management,leverage and lot size.Help would be appreciated.

Well in a nutshell:

1st - check the volatility of the markets you are trading - how big is the average candle size? If you are seeing many candles on a 5 minute chart that are 12+ pips, and some that are more like 20+ pips you will be very smart to trade smaller - I would not go more than 2 microlots - certainly not more than 3. If things are slower, maybe not so choppy, you could be willing to go to that maximum size of 5 micro lots - but be careful even this size can do damage if things move fast and you hold on to a loser too long - you could easily lose 10% of your account in a short space of time.

2nd - decide how you will manage your losses - because you are going to have them. When will you stop out? If there is more volatility, you can trade smaller, but have a wider stop loss. Will you add to a losing trade?(be warned that adding too much to a losing trade can result in a sizable loss) However, adding to a winning trade can be a good idea, despite getting a worse average price.

It is often recommended to not risk more then 1 -2% per trade - although with the volatility we are seeing lately during NY morning session - that could easily happen to you trading 0.02 lots in pairs like EURUSD & USDCAD with a $500 account. Don’t be afraid though - losses are a part of the game you have to accept - but you want to develop a strategy where your winners outpace your losers. This can often be achieved by adding less to your losers, and stopping out fast - and adding more to your winners, and letting them run, as you learn the right conditions to do this.

Many thanks:)

just a last question bro ,suppose i have a $300 acoount and i leverage it to 1:40 which makes my account balance 12000,if i execute a order with one mini lot and gained or lost 30 pips how would it affect my account?

So trading a mini lot is approx. equal to $1/pip - so you would be up or down $30.00 which would be a gain or loss of 10%. Keep in mind a worst case scenario when you trade such sizes though - if this scenario happens about 10 times,- then you’ve lost your capital. Of course the more leverage you use - the greater the risk of ruin on a few bad trades. If you trade a micro lot however - then you are only up or down $3.00. While this may not be as much money as you want to make - it will help you to stay in the game longer, and really give you a chance to learn how to trade - which could lead to more money down the road if you put in the hard work required to become a good trader. Good luck!