Is my leverage wrong?
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.
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.
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