I would like to know using mini lots. If you will please. 
If you trade a 1 lot position, which is 100,000 EUR/USD, the pip value is $10, so a 100 pip move is $1000 ($1/pip and $100 respectively if youâre talking mini lots) regardless of whether the market rises or falls by that amount and regardless of whether you are at 100:1 or 200:1 leverage.
The effective leverage you use (the ratio of the position size to your account balance) will determine your % return, but it wonât change the actual profit or loss.
Am I answering the question youâre asking?
Not sure if there is some trick to your question or if Iâm not quite understanding how youâre stating it.
The key phrase in here is ârisk 1% of your capitalâ. This means that you only want to risk losing 1% of your money if your stop loss is hit. Since you donât state what your stop loss level is it gets kind of tricky. As youâll see below, youâll lose a lot more than 1% of your money if you trade using one standard lot.
Here you are opening a one lot position. Letâs assume that youâre talking about a standard 100,000 unit lot. This means that each pip movement will equate to a $10 gain or loss. Letâs also assume that the EUR/USD is trading at 1.300 (and ignore spreads for now).
Note that opening a 100,000 unit position means that you have opened a position that is worth $130,000. This means your gearing is 13:1.
Your open position size has nothing to do with the leverage that is being offered by your broker, other than the fact that your the total gearing of all your open trades must not be greater than the leverage offered by your broker.
If you had a 100 pip loss, then you would lose $1000 (100 pips x $10 per pip). A 100 pip move in your favour nets you a profit of $1000.
If you performed the exact same trade when your leverage was 200:1 then there would absolutely no difference in the amount of money you would make or lose. Your gearing would be exactly the same and thus your profit or loss would be the same.
The extra leverage would allow you to borrow more money from your broker to put on a larger trade (i.e. increase your gearing) if you so desired, but it has no effect on a trade that is a fixed 1 lot entry.
No stops and no limits.
Are you saying no difference if I only trade one lot for each demo?
If you have a fixed trade size, your pip values will always be the same regardless of the leverage involved or the size of your account - at least for non-USD base pairs like EUR/USD, GBP/USD, etc. For the USD base pairs like USD/CHF the pip values will change with the exchange rates.
Hi There
On my charts earlier today i got a serious spike in all YEN and all CHF pairs, eg. USDJPY dropped from the 116âs right down to just below 65 (±10:00am) did any1 else see this ? and if so what causes this huge spike?
Thanks
Sounds like an error with the data feed you are using. Take a look at another data feed and you most likely notice that this supposed spike never actually happened.
You get these types of errors occasionally, especially from lower quality data sources.
Thanks!
I am loving this. I am trying to help the people of the world to understand something about leverage. The details keep getting in the way. :o
I guess my next step is to open two demos and trade them, with the differences being leverage, and then post the results. I will do this quickly.
I am so thankful for every ones help.
The details are as follows:
[B][U]Demo one,[/U][/B]
~Balance $10,000, one lot controls $10,000, Leverage 200:1, Used margin about $96.
[B][U]Demo one,[/U][/B]
~Balance $10,000, one lot controls $10,000, Leverage 400:1, Used margin about $48.
As soon as both trades were executed, both positions were -$5.00.
If anyone has a question, just ask and I will check each demo for the answer.
Thanks!
thanks, i am currently using itradefx i did check that they were registered with NFA (National Futures Ass.) who regulates forex brokers in the USA and they we registered. I will take the problem up with them.
Thanks
What exactly are you trying to demonstrate here?
As Colin and I have both explained, the different leverage available for use in the two accounts has absolutely no relevance to $$ made or lost when the trade sizes are exactly the same. The difference is only in terms of return on the required margin deposit.
Maybe Iâm getting in on this kinda late, maybe this was already said, but, you could increase lots. Of course you wouldnât increase it to the original. so say you start on 1:50 then move to 1:200. Then you could double the lots. However you would only use this if you intend to decrease the lots as the trade goes against you, that way, when you win you have more lots then when you lose and if you set your profit target farther you have the good old profit > risk. This way you decrease your risk in 2 ways. Of course if increasing leaverage was to increase you lots to the original, that would not be good. Anysways just my thoughts on the subject. I know this subject sure is causing some controversy, but I donât mean to step on anyones toes!
HmmmâŠ
This stuff doesnât efect my trade style. That is why I am not concerned with it.
Some new people, including myself at one time, think that if you increas your leverage you can increas your lots.
The only thing I want to help many people understand is the small difference between one leverage percentage and another. The small differenc that could put a big hurt on one trade style and totaly make another.
rhodytrader, I so enjoy your input.
Thank you very much.
All is good.
No one has stepped on my toes.
Thanks, stay cool.
If you increase your leverage you [B]CAN[/B] increase your lots. At 100:1 leverage a $10,000 account can trade a $1,000,000 position, while at 200:1 you could trade a $2,000,000 position.
That doesnât mean you [I]should[/I] increase your size, of course.
When I developed my own trade style I quickly realized that using the highest leverage posible is a huge benifit to me. I do not recommend a higher leverage unless you prove on a demo that the benifits out way the risk.
Thank you again rhodytrader.