Hello,
I understand what leverage is, but I am confused about how leverage works in forex trading profit and loss (P/L).
Currently, I am trading with a leverage of 1:1000.
For example, let’s say we are trading the EURUSD with a Take Profit of 30 pips and Lot size 0.01.
Currently, 1:1000 leverage makes me $3 for 30 pips on EURUSD with Lot size 0.01. Will leverage 1:2000 make $6 for 30 pips for same lot Size? Will leverage 1:500 make $1.5 for 30 pips for same lot size?
- Why do people say that overleverage can kill trading capital?
- How do I choose the correct leverage?
No, that isn’t how it works. Pip value is unaffected by leverage. 1 full lot of EUR/USD moves at $10 per pip regardless of your leverage. You need the School of Pipsology, where all this is explained.
You don’t really need to. All you need to do is choose a broker that’s properly regulated (i.e. by FCA, ASIC, CFTC, NFA) and it’s taken care of for you, because they don’t allow crazy leverage by law.
A broker allowing leverage of 1:1,000 on your account proves that your account is not properly regulated.
Be careful with European regulators. Some countries like Bulgaria, Cyprus, and Malta meet only the most basic requirements of regulation, while others (e.g. UK and Switzerland) are far better regulated.
Regarding all your other questions above, the answer is really “start here” (everything you need to know is well and clearly explained!): -
I am using Hotforex and FBS. What your feedback on this?
Can you provide me best broker list regulated from regulated countries?
As I just explained above, a broker allowing leverage of 1:1,000 on your account proves that your account is not properly regulated.
The School of Pipsology here will help you with these and all your other questions in so many other threads, but only if you are willing to study it.
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