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Is my leverage wrong?

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banana.boy
134
banana.boy  

Hello, my broker and MT4 journal indicate that my leverage is 500:1 but when I open a 0.01 lot in MT4, in my brokerage account it opens 1 lot. That is a 100:1 ratio, shouldn't it open 5 lots? Or am I not understanding leverage correctly?

 Thank you 

Alain Verleyen
Moderator
31185
Alain Verleyen  
banana.boy:

Hello, my broker and MT4 journal indicate that my leverage is 500:1 but when I open a 0.01 lot in MT4, in my brokerage account it opens 1 lot. That is a 100:1 ratio, shouldn't it open 5 lots? Or am I not understanding leverage correctly?

 Thank you 

If you give an order to open 0.01 lot, that broker/platform should open 0.01 lot. What is changing with the leverage is the margin used to open this 0.01 trade.

Tonny Obare
31526
Tonny Obare  
If you open 0.01 lots and your broker shows trades with lot size other than 0.01 lots wether 1 lot or 5 lots then there is a problem. Also, how are you coming to the conclusion that it should be 5 lots. Leverage only affects the amount of money represented by a lot e.g. for 1:100 leverage in eurusd 0.1 lot uses $100 in the trade while 1:1000 uses $10 for the same lot size. With 1:1 leverage you will need $10,000 to open a trade with 0.1 lot.
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