Forex Leverage for Beginners Explained (lot sizes and pips)
Forex leverage is a great tool for beginners in forex trading to understand. In this video I will explain everything you need to know about forex leverage, pip, and lot sizes.
Leverage involves borrowing a certain amount of the money needed to invest in something. In the case of forex, money is usually borrowed from a broker. Forex trading does offer high leverage in the sense that for an initial margin requirement, a trader can build up—and control—a huge amount of money.
To calculate margin-based leverage, divide the total transaction value by the amount of margin you are required to put up:
Margin-Based Leverage = Total Value of Transaction / Margin Required
For example, if you are required to deposit 1% of the total transaction value as margin and you intend to trade one standard lot of USD/CHF, which is equivalent to US$100,000, the margin required would be US$1,000.
Margin-Based Leverage Expressed as Ratio Margin Required of Total Transaction Value
400:1 0.25%
200:1 0.50%
100:1 1.00%
50:1 2.00%
However, margin-based leverage does not necessarily affect risk, and whether a trader is required to put up 1% or 2% of the transaction value as margin may not influence their profits or losses. This is because the investor can always attribute more than the required margin for any position.
To calculate the real leverage you are currently using, simply divide the total face value of your open positions by your trading capital:
Real Leverage = Total Value of Transaction / Total Trading Capital
For example, if you have $10,000 in your account, and you open a $100,000 position (which is equivalent to one standard lot), you will be trading with 10 times leverage on your account (100,000/10,000). If you trade two standard lots, which are worth $200,000 in face value with $10,000 in your account, then your leverage on the account is 20 times (200,000/10,000).
In the foreign exchange markets, leverage is commonly as high as 100:1. This means that for every $1,000 in your account, you can trade up to $100,000 in value. Many traders believe the reason that forex market makers offer such high leverage is that leverage is a function of risk.
In trading, we monitor the currency movements in pips, which is the smallest change in currency price and depends on the currency pair.
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For charts Use Trading View
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New Official Telegram Group
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https://t.me/TMAbyArty
Looking for a forex broker?
I use Osprey
https://ospreyfx.com/tradewithtma
regulated broker i recommend is Blueberry markets
https://bit.ly/blueberrytma
Try a $100,000 funded account from OspreyFX
https://ospreyfx.com/tradewithtma
Use coupon code
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To get $50 off
or try FTMO
https://ftmo.com/en/?affiliates=2677
Get a free audio book from audible
https://tmafocus.com/2WyXSqa
Links to the indicators
TMA Overlay
https://www.tradingview.com/script/zX3fvduH-TMA-Overlay/
TMA Divergence indicator
https://tmafocus.com/3nfcEfd
TMA shop
https://shop.spreadshirt.com/themovingaverage/
Get some free stocks from WEBULL
https://tmafocus.com/3p0vatP
also
Get some free stocks from Public
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Trading Platform
META TRADER 4
NOT FINANCIAL ADVICE DISCLAIMER
The information contained here and the resources available for download through this website is not intended as, and shall not be understood or construed as, financial advice. I am not an attorney, accountant or financial advisor, nor am I holding myself out to be, and the information contained on this Website is not a substitute for financial advice from a professional who is aware of the facts and circumstances of your individual situation.
We have done our best to ensure that the information provided here and the resources available for download are accurate and provide valuable information. Regardless of anything to the contrary, nothing available on or through this Website should be understood as a recommendation that you should not consult with a financial professional to address your particular information. The Company expressly recommends that you seek advice from a professional.
*None of this is meant to be construed as investment advice, it’s for entertainment purposes only. Links above include affiliate commission or referrals. I’m part of an affiliate network and I receive compensation from partnering websites. The video is accurate as of the posting date but may not be accurate in the future.
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Forex leverage is a great tool for beginners in forex trading to understand. In this video I will explain everything you need to know about forex leverage, pip, and lot sizes.
Leverage involves borrowing a certain amount of the money needed to invest in something. In the case of forex, money is usually borrowed from a broker. Forex trading does offer high leverage in the sense that for an initial margin requirement, a trader can build up—and control—a huge amount of money.
To calculate margin-based leverage, divide the total transaction value by the amount of margin you are required to put up:
Margin-Based Leverage = Total Value of Transaction / Margin Required
For example, if you are required to deposit 1% of the total transaction value as margin and you intend to trade one standard lot of USD/CHF, which is equivalent to US$100,000, the margin required would be US$1,000.
Margin-Based Leverage Expressed as Ratio Margin Required of Total Transaction Value
400:1 0.25%
200:1 0.50%
100:1 1.00%
50:1 2.00%
However, margin-based leverage does not necessarily affect risk, and whether a trader is required to put up 1% or 2% of the transaction value as margin may not influence their profits or losses. This is because the investor can always attribute more than the required margin for any position.
To calculate the real leverage you are currently using, simply divide the total face value of your open positions by your trading capital:
Real Leverage = Total Value of Transaction / Total Trading Capital
For example, if you have $10,000 in your account, and you open a $100,000 position (which is equivalent to one standard lot), you will be trading with 10 times leverage on your account (100,000/10,000). If you trade two standard lots, which are worth $200,000 in face value with $10,000 in your account, then your leverage on the account is 20 times (200,000/10,000).
In the foreign exchange markets, leverage is commonly as high as 100:1. This means that for every $1,000 in your account, you can trade up to $100,000 in value. Many traders believe the reason that forex market makers offer such high leverage is that leverage is a function of risk.
In trading, we monitor the currency movements in pips, which is the smallest change in currency price and depends on the currency pair.
The trading floor is a new project that I just launched.
World class day trading education and tools
https://www.trdfloor.com/welcome
my twitter https://twitter.com/artybryja
For charts Use Trading View
https://www.tradingview.com/?aff_id=113274
New Official Telegram Group
TMA OFFICIAL®
https://t.me/TMAbyArty
Looking for a forex broker?
I use Osprey
https://ospreyfx.com/tradewithtma
regulated broker i recommend is Blueberry markets
https://bit.ly/blueberrytma
Try a $100,000 funded account from OspreyFX
https://ospreyfx.com/tradewithtma
Use coupon code
movingaverage50
To get $50 off
or try FTMO
https://ftmo.com/en/?affiliates=2677
Get a free audio book from audible
https://tmafocus.com/2WyXSqa
Links to the indicators
TMA Overlay
https://www.tradingview.com/script/zX3fvduH-TMA-Overlay/
TMA Divergence indicator
https://tmafocus.com/3nfcEfd
TMA shop
https://shop.spreadshirt.com/themovingaverage/
Get some free stocks from WEBULL
https://tmafocus.com/3p0vatP
also
Get some free stocks from Public
https://tmafocus.com/3GUUojh
Trading Platform
META TRADER 4
NOT FINANCIAL ADVICE DISCLAIMER
The information contained here and the resources available for download through this website is not intended as, and shall not be understood or construed as, financial advice. I am not an attorney, accountant or financial advisor, nor am I holding myself out to be, and the information contained on this Website is not a substitute for financial advice from a professional who is aware of the facts and circumstances of your individual situation.
We have done our best to ensure that the information provided here and the resources available for download are accurate and provide valuable information. Regardless of anything to the contrary, nothing available on or through this Website should be understood as a recommendation that you should not consult with a financial professional to address your particular information. The Company expressly recommends that you seek advice from a professional.
*None of this is meant to be construed as investment advice, it’s for entertainment purposes only. Links above include affiliate commission or referrals. I’m part of an affiliate network and I receive compensation from partnering websites. The video is accurate as of the posting date but may not be accurate in the future.
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33 Comments
Awais K
March 12, 2023 - 1:46 amDivergence indicator not working for me. What do i do?
nazwar karim - STOCK TRADING
March 12, 2023 - 1:46 amTq for your video..need more with regard to leverage
Виталий Т.
March 12, 2023 - 1:46 amNow everything clear!!!Thanks!
Nebiyu Mekonnen
March 12, 2023 - 1:46 amThank you! Very simple and clear!
cephas petrus
March 12, 2023 - 1:46 amThanks 🙏👍
Which broker a suggest for a beginner to use?
stephen urasa
March 12, 2023 - 1:46 amone thing i know is you are very talented teacher i am waiting to see the video of how to trade automaticaly
allen nelson
March 12, 2023 - 1:46 ammt4 on new trade shows volume –i want 1 mini lot .1 but when trade is entered the terminal mt4 shows size .10 why the difference thanks
Sunshine Peter
March 12, 2023 - 1:46 amLiked video
Brian
March 12, 2023 - 1:46 amso if i blow a account with leverage do i owe the leverage money back?
Ome
March 12, 2023 - 1:46 amYou are very intelligent and good heart thanks
Florian Lorenz
March 12, 2023 - 1:46 amcan u change the leverage by any position u will buy or sell ? or u have to pick on leverage when u made a account at your broker and this leverage will stay anytime
ben or
March 12, 2023 - 1:46 ambig thank you from LA
great job you make the learning curve EZ.
if you can share your discod group i would like to join you guys trading
Jerico dela cruz
March 12, 2023 - 1:46 amWhat leverage I should use?
Skyscraper21
March 12, 2023 - 1:46 amgreat explanation
Duurty Donz
March 12, 2023 - 1:46 amThank you for this video. This made so much sense to me and will help me on the start of my journey.
justme🤤
March 12, 2023 - 1:46 amIdol😍
Oliverj4678
March 12, 2023 - 1:46 amWhat I don't understand and I would love for someone to explain it. He said 'not only do you have more buying power but you are risking less of your own money' but surely if the trade goes bad and you lose that money you would owe the broker the leverage money that you lost. So by definition you still have the potential to lose the exact same amount of money as if you were going to just put all the money up front. There's no difference?
era22
March 12, 2023 - 1:46 amHi, I thought in America the max amount of leverage is 50:1. That is what I saw on google and heard other forex traders say
Jey-Ey-Em-Bee
March 12, 2023 - 1:46 am😊
zachary scott
March 12, 2023 - 1:46 amGreat vid to watch!! Basically forex for dummies lol. Clear and concise 😎🔥! Can't believe it's been almost 3 years since I started my journey with IM academy 🤪😌
Hasan
March 12, 2023 - 1:46 amSo do you mean blueberry market is not safe or what!
Raghavendra Annam
March 12, 2023 - 1:46 amAmezing
Jefferson Elias
March 12, 2023 - 1:46 amSo If I am opening a Demo account and want to keep it as real as possible to my reality for when I go live, what leverage should I go for? 1:10, 1:50, 1:100?
Still struggling with it 🙁
Thanks
Black Horse
March 12, 2023 - 1:46 amHello
I just wanna to say hi
I am following you from Egypt 🇪🇬
And I want say you made me laughing 😂 while your reaction when you said micro . In (2:02) minutes in that video
So funny bro .i repeat when you said because it small I repeat 4 times.I like you and I want tell you that . You have bro in Egypt that’s mean u have home in Egypt. You welcome any time bro
Regards for u from Egypt
Lasse Offenbach
March 12, 2023 - 1:46 amyou are by far the best to explain this in terms that can be understood by a complete trade newbie like myself. I literally know zero about trading but would really like to learn, and your videos are the only ones explaining so it's easy to understand! – THANKS!!!
C J
March 12, 2023 - 1:46 am1:50 in the US
Kat Monra
March 12, 2023 - 1:46 amThank you! I’ve been looking for videos that thoroughly explain leverage and how to use it/set it up. It was not explained on the trading view tutorial video (a 20 minute video) and I want to practice paper trading using leverage just to get a feel for what I’m comfortable with!
Joel Rd
March 12, 2023 - 1:46 amThanks for the video !
Janith Gamage
March 12, 2023 - 1:46 amThanks man 🙏
Weirdo De Wizard
March 12, 2023 - 1:46 amThis is the best video on leverage.
Geetha 0201
March 12, 2023 - 1:46 amBro, i had only $10 in my account, what liverage should i choose and im from India
Dapper Division
March 12, 2023 - 1:46 amis there a way i can turn off leverage?
Inge Hengari
March 12, 2023 - 1:46 amGood explanation!!@
Comments are closed.