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Thread: Forex Leverage

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    Default Forex Leverage

    Hi all,

    I'm newbie here ...if I've deposit with min $25 and I want to trade with 1:500 leverage is it possible ? How many $ for 1 pip ?

    Thanks

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    Pip value depends on the currency traded. JPY crosses are about 82c per pip for 0.1 lots. Majors like eur/usd and gbp/usd are $1 per pip for 0.1 lots.
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    Default

    Quote Originally Posted by fxtrendline View Post
    Hi all,

    I'm newbie here ...if I've deposit with min $25 and I want to trade with 1:500 leverage is it possible ? How many $ for 1 pip ?

    Thanks
    Hi. please look at the following thread to compute how many lot you can use with your deposit and leverage: How to compute margin requirement.
    Btw. There is an incorrect information in that post. For fxopen the requirement to maintain a position is not 50% of original margin but only 10% of original margin. That is, if you use 1:500 to open a position, it is 1:5000 to maintain a position!

    The pip value has nothing to do with how much you deposit or the leverage you use. Read the following thread to compute Pip value

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    Default

    after doing some reshurch i have become really confused as to leverage, an example, i deposit 100$ and have a leverage of 1:500, that means that i have a margin of 50,000$? right?

    so i can now control 50k worth of currency trades, lets say that i place an order for 1 unit,(gbpusd) that costs me 283$ from my margin. and 30 for the spread. but i cant place an order for more than 100$ so i have to buy .1 unit @ 28.3$ and 3 for the spread.

    I don't really understand this, could someone explain?

    thanks
    Psymon Peers

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    Default

    Quote Originally Posted by Psymon View Post
    after doing some reshurch i have become really confused as to leverage, an example, i deposit 100$ and have a leverage of 1:500, that means that i have a margin of 50,000$? right?

    so i can now control 50k worth of currency trades, lets say that i place an order for 1 unit,(gbpusd) that costs me 283$ from my margin. and 30 for the spread. but i cant place an order for more than 100$ so i have to buy .1 unit @ 28.3$ and 3 for the spread.

    I don't really understand this, could someone explain?

    thanks
    When you have leverage, it doesn't mean you see that leverage in your account balance. It just affects the margin cost to open the trade.

    0.1 lots is 10,000 of base currency. In the case of your GBP/USD example, GBP 10,000 costs approximately USD 14,300. Divide the $14,300 by your leverage. For example 1:500.

    So 14,300/500=$28.60

    Your $28.60 has been increased 500 times.
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    Default

    Quote Originally Posted by fxtrendline View Post
    Hi all,

    I'm newbie here ...if I've deposit with min $25 and I want to trade with 1:500 leverage is it possible ? How many $ for 1 pip ?

    Thanks
    How to Calculate Pip Values

    A "pip" is the smallest increment in any currency pair. In EURUSD, a movement from .8941 to .8942 is one pip, so a pip is .0001. In USDJPY, a movement from 130.45 to 130.46 is one pip, so a pip is .01. How much in dollars is this movement worth, for example, per 10,000 Euros in EURUSD? How much is one pip worth per 10,000 Dollars in USDJPY? We will refer to the size, in this case 10,000 units of the base currency, as the "Notional Amount". The formula for calculating a pip value is therefore:

    (one pip, with proper decimal placement/currency exchange rate) x (Notional Amount)

    Using USDJPY as an example, this yields:

    (.01/130.46) x USD10,000 = $0.77

    or 77 cents per pip

    Using EURUSD as an example, we have:

    (.0001/.8942) x EUR10,000 = EUR 1.1183

    But we want the pip value in USD, so we then must multiply EUR1.1183 x (EURUSD exchange rate):

    EUR 1.1183 x .8942 = $1.00

    This is in fact a phenomenon you will see with any currency in which the currency is quoted first (such as EURUSD, GBPUSP, or AUDUSD): the pip value is always $1.00 per 10,000 currency units. This is why pip (or "tick") values in currency futures, where the currency is quoted first, are always fixed.

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    Hello Manager,
    Please what is the problem, I am running a cent account. I opened a position, 0.1 lot of Gbp/Jpy at 127.00 and I saw that the margin used is 142.60 cents instead of 25.40 cents. I checked my cabinet settings and noticed that the laverage is set to 1:500. I do not know where the problem is. Please help.

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    Default

    I am also new to forex can any body please explain this in more details? what i know is just about the values how does they change, and what benefits we can get with that? Is this is the same that we are discussing?

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    Default

    Quote Originally Posted by fireflies View Post
    Hi. please look at the following thread to compute how many lot you can use with your deposit and leverage: How to compute margin requirement.
    Btw. There is an incorrect information in that post. For fxopen the requirement to maintain a position is not 50% of original margin but only 10% of original margin. That is, if you use 1:500 to open a position, it is 1:5000 to maintain a position!

    The pip value has nothing to do with how much you deposit or the leverage you use. Read the following thread to compute Pip value
    the links are not working... maybe someone can fix or update them? seems like a useful bit of information

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