Hi,
I am trying to understand the basics behind forex trade copying and have come across all sorts of terminology, most of which I am clueless about. I want to further educate myself in this area and wonder if anybody would answer these questions.
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I see four phrases used for potential master traders: amount following, profit and loss, balance and equity. I take it this is the total amount the master trader has to trade with. (maybe ‘amount following’ is the total of money other slave traders as a collective are risking on the master traders trades?)
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my next question concerns the phrase ‘lot size’. when the phrase “0.1 lot size” or “0.6 lot size” is mentioned, what exactly does this mean?
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The phrase ‘leverage’, as I understand, allows a trader to trade larger sums of money for a lesser amount. I have also heard the phrase ‘margin’. I see “leverage 1:500” and “leverage 1:100” as examples.
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I understand that a slave trader with significantly less money than the master trader stands to lose all their money if they attempt to copy trades. when, if it does at all, does “leverage” or “lot size” have an effect on this?
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When I look through potential traders to copy I see this on certain accounts:
“You will need $X to copy all Trader’s positions with 1 micro lot each and 100:1 leverage.”
“You will need $X to copy all Trader’s positions with 100% ratio and 100:1 leverage.”
Could someone please explain these statements fully.
Thank you in advance.