This Is How To Determine Leverage And The Amount Of Capital In Forex Trading

This Is How To Determine Leverage And The Amount Of Capital In Forex Trading

Leverage is not determined alone, but it is selected. The broker provides several leverage options, usually 1: 100, 1: 200, 1: 500 to 1: 1000. You can choose which one you want. Leverage relates to the margin or security deposit per trade. For example, you are trading with 1: 100 leverage, your guarantee fund (margin) is 1% of the contract value if the leverage is 1: 200 then your margin is 0.5% of the contract value. The bigger your leverage means the smaller your required margin will be. As for the brokers, if you need to hire one, you can go to http://www.cnie.org/highleverage/forex-brokers.html to hire excellent brokers with high leverage.

The calculation for the margin value for the pair XXX / USD (EUR / USD, GBP / USD. AUD / USD, NZD / USD) is: USD 100,000 x (lot size) x (% margin) x current market price. For funds of USD 10, you should choose large leverage, for example, 1: 500 or 1: 1000, so that your margin is small, and your resistance is large. In this case, you can enter the cent account, which for the pair XXX / USD 1 lot ¢ the value per pip is USD ¢ 0.1. On a cent account, the contract value of 1 lot is one-hundredth of the micro account, which is USD 10 or 0.0001 of the standard lot, or equal to 10 x USD ¢ 100 = USD ¢ 1000.

In a cent account, your funds = USD 10 x 100 = 1000 USD cents. For example, leverage = 1: 500. If you buy or sell 1 lot ¢ EUR / USD at 1.1400, the required margin = (USD ¢ 1000) x 1 x 0.2% x 1.1400 = USD ¢ 2.28. Your funds to hold the position until it is hit by a margin call are: (USD ¢ 1000 – USD ¢ 2.28) / USD ¢ 0.1 = 9977 pips. If you buy or sell 10 lots ¢ EUR / USD at 1.1400, the required margin = (USD ¢ 1000) x 10 x 0.2% x 1.1400 = USD ¢ 22.8. Your funds to hold the position until it is hit by a margin call are: (USD ¢ 1000 – USD ¢ 22.8) / USD ¢ 1 = 977 pips with reasonable resistance.

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