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banana.boy
134
banana.boy 2013.09.26 18:15 

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
30297
Alain Verleyen 2013.09.26 18:48  
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
27006
Tonny Obare 2013.09.26 20:16  
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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