Leverage ... 1:100 or 1:200

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Hi all,

Can somebody tell me in simple words what is practicaly different between 1:100 and 1:200 as my broker is offering both ...

For example if I deposit 5000$ ... What I can do more or less with one or another and are more/less risk?

I made few EAs so I would like to know what is better for me to work on.

Thanks in advance

 

Leverage, in simple words, is the ratio which shows the amount of money you need to have in your account in order to make any size positions.

For example:

If you have chosen leverage 1:100, you need to have at least $1,000 deposited in your account in order to take a 1 lot position - $100,000.

If you have selected leverage 1:200, you need to have at least $500 in your trading account in order to take 1 lot position - $100,000.

Keep in mind that high leverage is more risky. You need to have a proper money management.

Hope this helps.

 

Thank you very much

Thanks a lot for quick answer ...

So basically for me is safer to go on 1:100 ... Is there any benefit to go with 1:200?

If your money management is good (lets say like that) is it easier/faster to earn money on 1:200 than on 1:100? For example if I BUY something ... and price jump 10 pips ... do I earn same on 1:100 and on 1:200 or more on 1:200 if I choose that more risk way?

 

The higher your leverage is, the higher the risk/reward. In your example of 1:100 vs 1:200, your would get double the profit with 1:200 if you win. And conversely, you would also lose twice as much with 1:200.

The benefit is the leverage itself. With a smaller amount of money, you have the potential to earn a lot more with higher leverage.

I believe most scalpers want higher leverage since they would just be contented with a few pips of profit per trade. And with a higher leverage, the few pips profit would translate to a larger amount in absolute terms. But then again, the converse is true when it comes to losses.

 

Thank you ...

That is my case ... 1-5 mins periods ...

Thanks for explanations

 

For more details on leverage and margin:

Forex Leader: Understanding leverage and margin calculations

Happy trading,

Ms_Mel

 

leverage/risk

Hello everyone,

here's a newbie question:

My question is related with high leverage and money management. For instance, if one risks 3% on a trade and are at 100:1 leverage, isn't that better than risking 20% on a trade at 50:1 leverage?

Thanks

 
fxdriver:
The higher your leverage is, the higher the risk/reward. In your example of 1:100 vs 1:200, your would get double the profit with 1:200 if you win. And conversely, you would also lose twice as much with 1:200.

The benefit is the leverage itself. With a smaller amount of money, you have the potential to earn a lot more with higher leverage.

I believe most scalpers want higher leverage since they would just be contented with a few pips of profit per trade. And with a higher leverage, the few pips profit would translate to a larger amount in absolute terms. But then again, the converse is true when it comes to losses.

WTF!

"In your example of 1:100 vs 1:200, your would get double the profit with 1:200 if you win."

No you would not, 50 pips is 50 pips, 1 lot is 1 lot regardless of leverage amount.

leverage is buying power, thats it.

 
philt:
WTF!

"In your example of 1:100 vs 1:200, your would get double the profit with 1:200 if you win."

No you would not, 50 pips is 50 pips, 1 lot is 1 lot regardless of leverage amount.

leverage is buying power, thats it.

i agree, the amount of leverage has nothing to do with profit or loss, but related to the margin requirement to open a position for a currency pair

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