Forex Lot Size And Leverage

Lot Size and Leverage

When you're trading forex online, it's non like you can load your car up with cash, bulldoze to a designated meeting identify and merchandise your Dollars for Yen. You are of course doing business via online contracts. Contracts that have standard sizes chosen lots in place to brand online forex trading standardised around the world.

The post-obit is a list of common lot sizes and the corresponding number of currency units that yous are in fact buying or selling.

i STANDARD lot represents 100,000 units of currency.
1 MINI lot represents 10,000 units of currency.
1 MICRO lot represents 1000 units of currency.

Both the Standard STP and RAW ECN forex trading accounts at Vantage are by default set up to be trading using standard lots. At first glance, this may seem like it is only suitable for large traders but don't worry because the Vantage MT4 platform allows yous to trade down to 0.01 of a standard lot, effectively giving y'all the opportunity to trade Micro lots if you delight. Past playing with fractions of a standard lot, traders of all levels are able to trade on a standard business relationship.

The adjacent question and then becomes; do I need $100,000 in my forex trading business relationship just to trade i single standard lot?! Don't stress, the answer is no. This is where forex traders apply what is known as leverage.

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When you lot trade forex using leverage, you lot actually are able to control more than money than the rest of your own trading account. The term comes about because with the broker's assistance, you are 'leveraging' the money that y'all have. Using leverage allows you to increase your profits because you are able to trade bigger size than a non-leveraged investment would allow.

At Vantage, a standard business relationship has leverage of 100:i. This means that for every $one,000 in your trading account, y'all are actually able to control $100,000 of currency. Think of leverage as your broker lending you the $100,000 so you can trade standard lot sizes. Your $1,000 account is what's known equally margin, and can exist seen as a proficient faith deposit while you are using their money to trade standard lot sizes.

For example, let's say your Standard STP trading business relationship at Vantage has a balance of $v,000 and the leverage you are using is 100:1. If you wanted to go long i standard lot of EUR/USD and then Vantage would set aside $i,000 equally margin and would let you lot to have the position.

This is an extreme instance and too highlights the risks that leveraged forex trading exposes you to. If the 'Margin Level' in your MT4 Terminal drops to fifty%, and then your position will exist automatically airtight and you will have experienced what is called a margin call.

With leveraged forex trading, risk management becomes key. Use a forex demo account to assistance empathize how to manage your risk while trading using leverage.