Hey guys
So I have been trading for over a year now but I never used metatrader (In this scenario metatrader 4)
But now I have one question.
Now imagine my broker gave me a 1:30 leverage and I have 1000$ in my trading account that would be 30.000$ or 0.3 lots but now I want to enter the trade with only 100$ of my current capital. Now im wondering if the leverage stays the same (1:30 x 100$ = 3000$ (0.03lots)) or if the leverage changes (1:3 x 1000 = 3000$ (0.03 lots)) I hope you can understand what I mean by that.
The leverage stays the same. The lot sizes are your choice. On a $1,000 capital your lot size should not be more than a $10 risk, otherwise you’ll blow your account when gambling $100. .
See leverage is not basically the lot size. they both are different. leverage just gives you extra margin to trade more with the same capital. So if your account leverage is 30X and you made a deposit of $10000, your margin required to place a particular trade will reduce 30 times. For example, you placed a trade on 1 lot of EURUSD at 1.20198 the margin required with 30X leverage will be Market price X Contract Size / Leverage = 1.20198 X 100000 / 30 = $4006.6
I hope this helps you to understand the concept. You can refer to margin calculators for better understanding
I’m sure the broker you’ll be trading with will have a margin calculator. Instead of wasting your time and energy, simply calculate the lot size against the leverage you wish to use. Why not benefit from the technology when it’s just a click away?
The leverage will stay the same until you change it at the backend. You can choose any lot size and it has nothing to do with the leverage you are using. Just make sure the lot size that you want to use is in accordance with your capital so that you don’t end up making a mistake.
The leverage is nothing but a ratio, a financial tool. The MT4 trading margin follows the formula, [Margin Required = (current market price x volume) / account leverage]. As long as you follow it, there won’t be any problem.
Leverage is a financial ratio that allows you to enhance your exposure by borrowing money. For example, 50:1 leverage means that the trader can control up to $50 in account equity (account balance) for every $1 in account equity (account balance). As a result, 200:1 leverage allows you to manage up to $200 USD for every dollar in account equity.
