Lots vs. leverage

Hi All

I am new to to trading on MT4 so lease be pateint with me.

I had one question, what’s the difference between lots and leverage.

I am starting to use MT4 and this would be really helpful. I haven’t seen the option to change the leverage but only the lot size.

I’m chosing between brokers and see that they offer different amounts of leverage.
For example Broker X offers 1:1000 leverage whereas Broker Y offers 1:500.

If I were to open a lot size of 250 would this mean the same across any broker?
Also what does a 250 lot size mean in terms of value, does this change depending on how much I have in my account. For example does it change if I had $1,000 or $10,000 in the account would the lot size compute to a different value.

Thanks in advance

“Lots” are the quantity of currency that you’re effectively buying/selling in opening a trade, and “leverage” relates to the proportion of their cost that your broker is effectively “lending you” for the duration of the trade.

Some do, sadly, because their business model as counterparty market-makers (i.e. betting against their own customers) and the way they go about their business predicates that they want to attract a “certain kind of inexperienced/naive customer” who will typically get into trouble (i.e. lose all his money to them) by using excessive leverage among other mistakes from which counterparty brokers make a living. Those are both ridiculously high figures.

Your questions are [I][U]all[/U][/I] answered, and the definitions explained, in the “School” pages, here: School of Pipsology | Learn Forex Trading

On the subject of leverage and its relation to position-sizing, specifically, the first page of this thread will also help you, [B]after[/B] reading the School pages, if you read it carefully: 301 Moved Permanently.

And welcome to the forum. :slight_smile:

Thanks for the response lexys.

I’ve checked out the links that you have provided, but am still confused on one thing.

I’ve downloaded an MT4 and am using a demo account and can only see the option to open a size of an order.

Does this relate to the lot size or the leverage size, or maybe both?

Thanks again in advance.

The lot size (position-size).

The [I]leverage[/I]-size will be determined somewhere else, i.e. at “account level”, rather than at “individual trade level”.

(Sorry, I haven’t looked at MT4 for many years and can’t be more specific, and that’s always [I]broker[/I]-dependent anyway, in that different brokers - as you’ve noticed - offer different leverage-ranges.)