ForEx leverage losses on a mini account?
Saturday, May 23rd, 2009 at
2:00 am
How do I calculate it? My broker says per pip. I use 100:1 leverage. The currency moves up 5 pips. I gain ? The currency loses 5 pips. I lose ? Please explain.
Tagged with: Currency • leverage • pip • pips
Filed under: Forex Mini Account
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The Price per pip depends on the currency you are trading and the position size you enter the market with. Here are a few examples that could be helpful:
Trading the GBP/USD with a position size of 0.1 lots(1 mini-lot) you will be trading at $1 per pip. If you take a position size of 0.01 (1 micro lot) you will be trading at 10 cents a pip. And of course if you trade a position size of 1.0 (1 standard lot) you will be trading at $10 per pip. In contrast if you trade the USDJPY you will be trading 95 cents per pip using 1 mini lot. There is a formula to determine the price per pip for each currency but the easiest way is to google “pip calculator”.
As for leverage, the leverage on your account does NOT change the price per pip. The leverage determines the maximum exposure you can have. Meaning, at 100:1 the sum of all your positions currently open would be 10 times the allowable sum of all your positions at 10:1. It also means that at 100:1 you can hold positions in the market at about $100 for every $1 you have in your account (I say about $100 for every $1 because the every currency is different).
From what you have written, you are using mini account, that is 1pip=$1dollar. If you were using a full account it would have been 1 pip = $10. Of course please note that it depends on the currency that you are trading as well.
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It depends all on the size of the account and which currency you are buying.