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Old 30-07-2003, 03:49   #7 (permalink)
peteuk
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peteuk has a little shameless behaviour in the past
yep

Your figs are correct

I don't think there are set levels for leverage, only maximum leverage (or minimum margin requirement), and minimum trade size (50k for my broker) ie to have a position of $100,000 (which some people call 1 lot), at a minimum 1% margin requirement = $1000 deposit to have the position open, plus of course your margin for market movements against you. So say your account balance was $10,000, you open a position for $100,000, that leaves you with an available balance of $9000. Pip value is $10, so in theory the market can move 900 pips (900 x $10) against you before you automatically get stopped out by the brokers software. In practice you'd get a margin call asking for more funds to keep the position open, or in reality you will have set appropriate stops probably around 30 pips (max 3% of capital risked per trade is sensible) and the bad trade would have been closed much earlier, preserving your capital.

The value per pip is directly proportional to the size of the trade. On the EUR/USD for example, 50k = $5, 100k = $10, $150k = $15 etc etc etc.

Pete
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