Guys I don’t know whether this is a major brain fart or if I’m just overthinking this but I am seriously confused about lot sizes and everything related to this. I’ve completed School of Pips, I’ve made notes, I’ve read books and for whatever reason cannot wrap my head around how we can trade more lots than we own without using margin. I feel like this is the only piece of info that’s holding me back from understanding forex properly.
In Baby Pips school Senior Year it says: “…Most traders trade one standard lot for every $50,000 in their account. If they traded a mini account, this means they trade one mini lot for every $5,000 in their account”.
OK, if that’s what they do, how does one trade a standard lot (which has 100k units) if they only have $50k? How is that even possible? If the answer is through leverage, does that mean that in MT4 when they trade a standard lot with $50k they put in “2.0” for the volume to essentially double the value of their pip? I did this once as a test in demo (don’t worry, I’m not trading live!) and my parameters were the following: having $50k USD account balance, and the value of each pip being $20 instead of $10. Needless to say I had my eyes peeled to the screen given that the pip value doubled. Since the value of a pip in a standard account is $10, I was very confused why it would be this same value in my demo account that only has $50k. Does this mean that the account is leveraged? If so, by how much? According to my printouts it says I have 1:50 leverage. What if I don’t want to be leveraged at all?
So my questions are:
-How can you trade 5 mini lots for example if you only have a balance of 1 mini lot?
-If leverage is the answer to the above question, how do you change this setting, is it through ‘volume’ on MT4?
-Does ‘volume’ on MT4 mean the same thing as lots?
-Does increasing ‘volume’ on an order entry mean that 3.0 volume = $30?
-What about decreasing volume, that would make the pips worth less, how’s that work?
-What do I put in ‘volume’ if I don’t want to be leveraged at all?
-How can you trade more lots than you own without margin?
-What happens if you use leverage (ie: 2 lots vs. 1) and you lose double the money, does that leveraged amount actually get deducted from your account balance or just the original amount? OR do you just get a margin call and are kicked out of your trade before you owe more money than you own?
-Is it ever possible to lose more money than your account balance?
I tried to organize my questions as best as I could and hope I didn’t confuse in the midst of my own confusion, thank you for the help!!!