Newbie questions concerning leverage

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Hi, guys.

Thanks for reading. I'm a complete newbie and got a few problems understanding leverage (not the mechanics!).

I'm currently trading a 1000€ account and have the options for leverage. So, if I switch to 1:50, the value of 1 PIP is the same as without leverage. Does this mean I can use a higher lot? And should it be switched manually? If so, then what about the margin? Will this go up as well if I use a bigger lot size (because the difference would be 300€ margin vs e.g. 3000€ margin)?


Thanks a lot in advance and my apologies for such beginners questions, but I couldn't find any other site explaining this.


With my best regards

Milosz

 

Risk depends on your initial stop loss, lot size, and the value of the symbol. It does not depend on margin and leverage. No SL means you have infinite risk. Never risk more than a small percentage of your trading funds, certainly less than 2% per trade, 6% total.

  1. You place the stop where it needs to be — where the reason for the trade is no longer valid. E.g. trading a support bounce the stop goes below the support.

  2. AccountBalance * percent/100 = RISK = OrderLots * (|OrderOpenPrice - OrderStopLoss| * DeltaPerLot + CommissionPerLot) (Note OOP-OSL includes the spread, and DeltaPerLot is usually around $10/pip but it takes account of the exchange rates of the pair vs. your account currency.)

  3. Do NOT use TickValue by itself - DeltaPerLot and verify that MODE_TICKVALUE is returning a value in your deposit currency, as promised by the documentation, or whether it is returning a value in the instrument's base currency.
              MODE_TICKVALUE is not reliable on non-fx instruments with many brokers - MQL4 programming forum (2017)
              Is there an universal solution for Tick value? - Currency Pairs - General - MQL5 programming forum (2018)
              Lot value calculation off by a factor of 100 - MQL5 programming forum (2019)

  4. You must normalize lots properly and check against min and max.

  5. You must also check FreeMargin to avoid stop out

Most pairs are worth about $10 per PIP. A $5 risk with a (very small) 5 PIP SL is $5/$10/5 or 0.1 Lots maximum.

 

Thank you for your detailed answer, but this did not answer my question concerning the margin... Does the margin rise with a higher leverage?

For example: I have 1000€, trade with no leverage 0.01lot. That means 0.08 Cent/PIP and a margin of 30€.

If I set the leverage to 100:1, can I raise the lot size to 0.1 and still have a margin of 30€ or would it rise to 300€?

 
No leverage, no margin.

If your leverage is 1:10, you will need to deposit a security (margin) of one tenth of your contract size.


 
A thousand thanks! I was going to try it off hand... Your answer was what I needed!
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