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LOT SIZE, PIPS AND LEVERAGE WHAT IS LEVERAGE Leverage is a tool that increases the purchasing power of the trader’s deposit. The mechanism is funded by the broker, or rather the liquidity provider working with the broker. The leverage mechanism is very simple. The higher the leverage is, the more funds we can invest in trading. Simply put, leverage is kind of a bank loan. But it is much cheaper, and the borrowers usually risk only their own funds on the account. WHAT IS A PIP A pip (percentage in point) is the minimum unit of measurement to express the change in value between two currencies in the Forex market. In currency pairs, 1 pip is often one hundred-thousandth, that is, the fifth decimal place in a currency quote (0.00001). For the derivatives, one pip is usually one hundredth (0.01). Simply put, a pip is the last decimal place in a quote. The pip cost is directly affected by the lot size. LOT SIZE IS The lot size is the number of currency units expressed in the quote currency that compose one whole contract. The quote currency is the currency that used to value the asset price. In the EUR/USD currency pair, the base currency is the EUR. Common lot types are: Standard,Mini-lot (0,1 of a standard one), Micro-lot (0,01 of a standard one), Nano-lot (0,001 of a standard one). LOT AND LEVERAGE RELATION The relation between these two concepts is that both these figures affect the total trade cost. The difference is that this influence is made in opposite directions. The larger is the lot size, the larger is the transaction volume, and, consequently, its value (I mean the security deposit you must have to open the position). However, the higher is the leverage, the less money is required for the trade margin and therefore, the less is the trade cost. CONCLUSION Forex lot size and leverage are the basic concepts for every forex trader. It is of key importance to understand them. Experiment with the calculator and the table to understand how the lot size and leverage affect your position size in particular and your trading in general. This practice will help you develop your own strategy and determine the “best” leverage for your trading goals. Dear followers, let me know, what topic interests you for new educational posts?
BITSTAMP:BTCUSDEducation
by SignalProvider
11
LOT SIZE, PIPS AND LEVERAGE WHAT IS LEVERAGE Leverage is a tool that increases the purchasing power of the trader’s deposit. The mechanism is funded by the broker, or rather the liquidity provider working with the broker. The leverage mechanism is very simple. The higher the leverage is, the more funds we can invest in trading. Simply put, leverage is kind of a bank loan. But it is much cheaper, and the borrowers usually risk only their own funds on the account. WHAT IS A PIP A pip (percentage in point) is the minimum unit of measurement to express the change in value between two currencies in the Forex market. In currency pairs, 1 pip is often one hundred-thousandth, that is, the fifth decimal place in a currency quote (0.00001). For the derivatives, one pip is usually one hundredth (0.01). Simply put, a pip is the last decimal place in a quote. The pip cost is directly affected by the lot size. LOT SIZE IS The lot size is the number of currency units expressed in the quote currency that compose one whole contract. The quote currency is the currency that used to value the asset price. In the EUR/USD currency pair, the base currency is the EUR. Common lot types are: Standard,Mini-lot (0,1 of a standard one), Micro-lot (0,01 of a standard one), Nano-lot (0,001 of a standard one). LOT AND LEVERAGE RELATION The relation between these two concepts is that both these figures affect the total trade cost. The difference is that this influence is made in opposite directions. The larger is the lot size, the larger is the transaction volume, and, consequently, its value (I mean the security deposit you must have to open the position). However, the higher is the leverage, the less money is required for the trade margin and therefore, the less is the trade cost. CONCLUSION Forex lot size and leverage are the basic concepts for every forex trader. It is of key importance to understand them. Experiment with the calculator and the table to understand how the lot size and leverage affect your position size in particular and your trading in general. This practice will help you develop your own strategy and determine the “best” leverage for your trading goals. I Hope you guys learned something new today✅ Wish you all Best Of Luck👍 😇And may the odds be always in your favor😇 Do you like this post? Do you want more articles like that?
Education
by ProSignalsFx
6
Risk Management - how not to lose your moneyLet's say you're new to trending. You have a deposit - for example, $ 10,000 - which you are ready to invest in earnings. And you come to the market with one thought - how to make more money! Stop! The first question that you should ask yourself before starting trading is: "How not to lose the money you already have?" Risk management will help you with this. There are many different "chips" and rules in order not to drain the deposit (and we will definitely talk about them in more detail). But today I want to discuss the most important rule: setting a risk limit. Different traders will give you different numbers. Someone considers the optimal risk of 5% of the deposit amount, someone - 7%. But everyone agrees that the amount should not exceed 10%. If a person tells you that you can bet more than this amount, he is not your friend. I believe that 1% of the deposit is optimal for beginners to trade. Few? No, it’s enough to make money and not enough to sell the house in case of failure. Above is a table with comparative risks - how much and how quickly you can lose depending on the percentage. I'll take $ 10,000 as an example. In this case, 1 percent of this amount will be $ 100. $ 100 is 0.1 lot to open a deal. This means that 1 pip on the chart will cost us $ 0.1. Maximum drawdown is the number of points that the price must go through in order for us to lose money (or, conversely, to earn). For example, the EURUSD currency pair can pass 1000 points per day. As you can see in the table: trading with an acceptable rate of 1% in case of failure will deprive us of only $ 100 10% - already $ 1000. 100% - all $ 10,000. Yes, if we succeed, we will be in the big plus. But the risk also increases. If you are a beginner trader, don't risk your capital. Open deals starting from a 1% deposit. If you are experienced... You can assume that I am conservative, but I also advise not to use more than 1% of the deposit. However, you are free to choose the percentage that is safe for you based on your background and strategy. ______________________________________________________________ Share with us what risk limit do you use in trading? Why choose this one? What other risk management rules do you want me to talk about?
Education
by DeGRAM
16