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) ?