# Leverage lesson confusion

I’m going through the lessons again and something doesn’t add up. Is this a mistake or is it me?
This is from the last lesson, the section called " More Leverage "

You deposit \$10,000 in your trading account. You buy 1 standard 100K of EUR/USD at a rate of \$1.0000. The full amount of your position is \$100,000 and your account balance is \$10,000. Your true leverage is 10:1 (\$100,000 / \$10,000)

Let�s say you buy another standard lot of EUR/USD at the same price. The full amount of your position is now \$200,000 and your account balance is still \$10,000. Your true leverage is now 20:1 (\$200,000 / \$10,000)

You�re feeling good so you buy three more standard lots of EUR/USD, again at the same rate. The full amount of your position is now \$500,000 and your account balance is still \$10,000. Your true leverage is now 50:1 (\$500,000 / \$10,000).

Assume the broker requires 1% margin. If you do the math, your account balance and equity are both be \$10,000, the Used Margin is \$5,000, and the Usable Margin is \$5,000. In a standard account, each pip is worth \$10.

[B][I]In order to receive a margin call, price would have to move 500 pips (\$5,000 Usable Margin divided by \$10/pip). [/I][/B] "

Should this read 100 pips ( \$50/pip , \$10 X 5 lots) ?

You are correct. The lesson runs in to trouble when it says “In a standard account, each pip is worth \$10.” That should have been clarified as each 100,000 position has a \$10/pip value, thus the full position would be \$50/pip. A move of 100 pips in price equals a \$5000 change in account value.

Yay! I’m learnin’ ! Thanks for the reply.

It was a test.

That error was put there on purpose to see if people were really reading the lesson.

You passed with flying colors!

Okay, I’m lying, it was a typo. It has been fixed. Thanks for pointing that out.