Quote:
Originally Posted by Jude
Now posing a question to the experts out there.
How does leverage work? and if you're beginning with maybe around $2,000.00, what sort of account should you be starting (mini account, etc etc) and what's a good ratio?
Fire away!
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Leverage, the classic question...
Lets try to explain it as simple as possible with an example:
A leverage of 200:1 means:
Your $1 in your account balance becomes $200 when you open a position. This means that a move on the market has a greater influence on your account, 200 times bigger than actually, this of course works in both ways, negative and positive.
So lets say you open a 1 lot with 200:1 leverage. 1 lot stands for 100,000. So with a leverage of 200 that would mean you use $500. (500*200)
So if your open position then gains 10 pips, you gain $100 with that $500. because it is 1 lot, you gain $10 for every pip. Same goes for losing pips.
I'll leave the rest to Christian
