Hi all,
New to babypips but loving it like all of you.
Probably best website for education. Btw i’m an absolute beginner!
Question:
On a video on youtube which shows the screen of a mobile phone, it says 24.7 usd profit on EURUSD. It also says lot of 0.05;
If i calculate myself, i don’t know how it arrives at such a profit for 49 pips profit (1.1048 down to 1.0999 short). The top of the screen shows a balance of 626 us$
Could anyone explain me this?
Thank you all
.05 lot = 5,000 units
The pip-value was $0.50 per pip (for a 5,000-unit position in a USD-denominated account trading the EUR/USD pair
Exactly 49 pips of profit in this trade would earn $24.50 (49 pips x $0.50/pip = $24.50).
You haven’t shown fractional pips in the entry and exit prices in the example trade, but …
Apparently, the exact pip-profit was 49.4 pips (49.4 pips x $0.50/pip = $24.70).
Welcome to this Forum, by the way 
Hi Clint,
Thanks a lot for your reply.
First i’m still learning from babypips but also trading demo account on IG.
Yes you were correct as looking at it it was exactly 49.4 pips.
I understand the 0.05 lot = 5000 units and i now realise my mistake as i miscalculated: the value of a pip for a micro lot (1000 units) is 0.1$.
WHICH leads to another question: the bloke in the youtube video start with a 100 $ account but must have about 10 positions like the one i described…that means he must have very high leverage.
The way i try to calculate this is:
1 trade of 0.05 lots of EURUSD would require a margin of 10% if he started like me with a leverage of 1:10 so if he starts with 100$ he would need a margin of 500$ to place a trade which is not possible in that exemple.
Am i wrong in the way i calculate or is there a trick/scam in this video?
Thank you for your reply
Jo
You’re only slightly wrong.
Recall that the margin is based on the notional value of the trade.
A 5,000-unit position in EUR/USD has a notional value of $5,394 (approximately) at the current price of EUR/USD = 1.0787
So, if the initial margin requirement is 10%, then to open this 5,000-unit position, free margin of $539.40 would have to be available in the account.
Your basic contention is correct: A 5,000-unit position in EUR/USD cannot be opened in a $100 account, if the maximum allowable leverage is 10:1 (i.e., 10% intitial margin required).
Many traders enjoy leverage limits way above 10:1, many by trading offshore with unregulated brokers. As you point out, the guy in the video must be trading with very high leverage. You obviously have enough knowledge to be able to calculate exactly how much leverage would be needed to do the trades portrayed in the video.