10:1 leverage is MINIMUM??? - Page 2
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  1. #11
    Join Date
    Nov 2006
    Posts
    8,766
    Pipbull, it sounds like you're a bit confused. The 10:1 leverage that Conan is talking about regarding Oanda deals with the margin required in order to trade.

    The 10:1 leverage means you must put up 10% of the lot size you wish to trade. For example, if you wish to trade $10,000 unit lot sizes, you must put up $1,000 as margin.

    The other examples you've written deal with true leverage of your account. Remember, true leverage is the full amount of your position divided by the amount of money deposited in your trading account.

    Let's say you have a $10,000 trading account. You open one lot. Since the brokers requires 10:1 "leverage" otherwise known as 10% margin required, you put up $1,000 as margin.

    Because you only have a one lot ($10,000) position open, and you have a $10,000 trading capital, your true leverage is still 1:1.

    The "10:1 leverage" you were talking about is merely the amount of money required to open a position (margin required).

    Do you see the difference? Brokers try to confuse you and that's why we try to unconfuse you.

  2. #12
    Join Date
    Dec 2006
    Posts
    184
    Quote Originally Posted by pipdiddy View Post
    Pipbull, it sounds like you're a bit confused. The 10:1 leverage that Conan is talking about regarding Oanda deals with the margin required in order to trade.

    The 10:1 leverage means you must put up 10% of the lot size you wish to trade. For example, if you wish to trade $10,000 unit lot sizes, you must put up $1,000 as margin.

    The other examples you've written deal with true leverage of your account. Remember, true leverage is the full amount of your position divided by the amount of money deposited in your trading account.

    Let's say you have a $10,000 trading account. You open one lot. Since the brokers requires 10:1 "leverage" otherwise known as 10% margin required, you put up $1,000 as margin.

    Because you only have a one lot ($10,000) position open, and you have a $10,000 trading capital, your true leverage is still 1:1.

    The "10:1 leverage" you were talking about is merely the amount of money required to open a position (margin required).

    Do you see the difference? Brokers try to confuse you and that's why we try to unconfuse you.
    By God I think I've got it!!!

    You're right, i was confused and brokers do try to confuse the hell out of you. But if i may suggest, while it is important to understand the leverage as far as the margin is concerned, i think it is the true leverage that in the end must really matter as it truly reflects what you have on the line.

    Thanks pipdiddy for the clarification and sorry for confusing the hell out of this thread

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