Forex Leverage for Beginners Explained (lot sizes and pips)
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- Опубликовано: 27 мар 2021
- Forex leverage is a great tool for beginners in forex trading to understand. In this video I will explain everything you need to know about forex leverage, pip, and lot sizes.
Leverage involves borrowing a certain amount of the money needed to invest in something. In the case of forex, money is usually borrowed from a broker. Forex trading does offer high leverage in the sense that for an initial margin requirement, a trader can build up-and control-a huge amount of money.
To calculate margin-based leverage, divide the total transaction value by the amount of margin you are required to put up:
Margin-Based Leverage = Total Value of Transaction / Margin Required
For example, if you are required to deposit 1% of the total transaction value as margin and you intend to trade one standard lot of USD/CHF, which is equivalent to US$100,000, the margin required would be US$1,000.
Margin-Based Leverage Expressed as Ratio Margin Required of Total Transaction Value
400:1 0.25%
200:1 0.50%
100:1 1.00%
50:1 2.00%
However, margin-based leverage does not necessarily affect risk, and whether a trader is required to put up 1% or 2% of the transaction value as margin may not influence their profits or losses. This is because the investor can always attribute more than the required margin for any position.
To calculate the real leverage you are currently using, simply divide the total face value of your open positions by your trading capital:
Real Leverage = Total Value of Transaction / Total Trading Capital
For example, if you have $10,000 in your account, and you open a $100,000 position (which is equivalent to one standard lot), you will be trading with 10 times leverage on your account (100,000/10,000). If you trade two standard lots, which are worth $200,000 in face value with $10,000 in your account, then your leverage on the account is 20 times (200,000/10,000).
In the foreign exchange markets, leverage is commonly as high as 100:1. This means that for every $1,000 in your account, you can trade up to $100,000 in value. Many traders believe the reason that forex market makers offer such high leverage is that leverage is a function of risk.
In trading, we monitor the currency movements in pips, which is the smallest change in currency price and depends on the currency pair.
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I'm sure nobody will look, but i like this while rewatching videos or specific parts..
0:00 Intro
0:47 Start
1:12 A pip
1:40 Lot sizes
2:20 Win examples
3:19 1 SL Order
3:56 Leverage comes into play
5:30 Sumup
5:58 Tools for calculating
6:35 Demo trades
7:06 Outro
ThankU
I think Admin should Pin this Comment on Top 😊
Very useful, thanks
I watched like 5 videos explaining leverage and this is the only one I understood, thanks man! 👍🏼
I just want to say I am just now starting off learning about the Forex I am a truck driver who does not want to drive trucks anymore. I stumbled across this from my big brother and I have absolutely fell in love with the process I love math I love numbers and analyzing things and breaking things down. I have started watching all sorts of tutorials for beginners and I must say I enjoyed yours the most. I have so much to learn it seems and I am curious about actually paying for a course to accelerate my learning. The moving average is a great platform for me personally, I love what you do and how you teach. I have at this point seen about 30 different videos and I want to narrow it down to just one instructor or teacher.
have you made any progress bro?
Same bro thoughts here bro. any progress?. ive just started my demo account $1000 now 1:100 leverage
@@noelnemenjo1242 Who do you open the demo account with? Could you please let me know? Thanks.
I would love to hear an update good luck bro :)
any update brother on your progress ?
Nice job Arty - seriously ... I just bookmarked this VID ...
I'm giving Forex another shot after doing a face-plant last year ... you''re the first person to answer ALL of my questions!
Thank you! I’ve been looking for videos that thoroughly explain leverage and how to use it/set it up. It was not explained on the trading view tutorial video (a 20 minute video) and I want to practice paper trading using leverage just to get a feel for what I’m comfortable with!
Hey man. Im working at a Warehouse and i have 2 young kids at home and a beautiful wife. I just wanna say thanks for your videos! You have inspired me to go all in and learn all i can about the forex markets so i can become a profitable trader fulltime! Cheers mate! Keep up the amazing content and god bless!
you are by far the best to explain this in terms that can be understood by a complete trade newbie like myself. I literally know zero about trading but would really like to learn, and your videos are the only ones explaining so it's easy to understand! - THANKS!!!
You’re so welcome 😉
Soooooo many videos but this one takes the cake! Well explained and thank you sooo much for breaking it down :) Subscribed!
Hello, i live en Denmark. i have my own company, and make about 200k a year in dollars. I have decided to dedicate a couple of hours everyday, over the course of a couple of years to learning about day trading to see where it leads me. i find your videos very informative and so i wanted to thank you. Hopefully i can become a full time day trader some day.
Absolutely love your content, thank you!
Best video in RUclips about leverage
fam this is a life saver idk why others dont make it clear like this
You earned a subscriber. Thank you so much for the amazing clean explained video tutorial.
wow after watching so many videos now is very clear to me what a pip really is. Thanks
we appreciate you Arty, thank you for all the great information
Thank you. Explained perfectly!
I just wanna say "I'm a beginner & literly I'm addicted to Your Teaching Method Mentor"
Lots of Love From Islamabad Pakistan 🇵🇰
Today is my second day on demo and I'm losing! But it is giving me courage. It took me one month to prepare myself !
The American leverage is inaccurate, I have a 50:1 with American broker. I've had it since 2018.
But I love the channel and keep up the good work. 👍
Wooow. The simplicity of this gents explanation is soothing . First ever comment I’ve made as a beginner on a Forex channel cause I literally learned something and know it now with a lot of confidence. Maaaaan !!!!! I’m super hyped now !!!! 🔥🔥🔥
Glad it was helpful!
Out of everyone I’ve watched, you sir, explained it the best, thank you
Wow, thanks!
Fantastic video.
You're the Best!
Thanks
Thank you for all the information you provide us with....
Thank you so much. I am learning so much.
thank u so much i would reccomend every begginers to watch this video for better understranding in these terms
Thank you so much, this information really help me a lot. God bless you, sir,
Can you do for gold calculation as well, thank you.
THANK YOU FOR ALL THE VIDEOS 🙏🙏🙏💫💫💫💫💫
Atlast i found a great video!!! Thanks a lot bro...
Arty do you have a video on risk management? What you recommend and some suggested rules to follow?
Great vid to watch!! Basically forex for dummies lol. Clear and concise 😎🔥! Can't believe it's been almost 3 years since I started my journey with IM academy 🤪😌
👍💪
The Truth About Day Trading Forex - Why Most People Fail
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I don’t know what you are doing in life right now, but you just explained this perfectly to a newbly like me
Good to hear it
Simple and straight forward thank you ..
Thank you so much for this. 🙏
Hey, just wanted to say thank you a lot, been learning about day trading for a bit and this video explained the very basics so clearly and thoroughly it just made it all make even more sense.
Great to hear!
Another Excellent Video! Thank you
i am watching all your videos. imlearning a whole lot thru you
🔥
Great content. Thank you!
Thanks man, i just started in forex with a leveraged account, and this video made it much more clear of how it works, and also i understand that i had a really lucky win on my 1st trading day(made 970 out of 500 with a 1:200 leveraged acc)
Glad to hear it
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Love your videos man. Dang so how much are people trading to actually make money like this? If you drop a standard lot and get a 10 pip gain you “put down” 100k to make $100? That sounds crazy.
Thank you! Very simple and clear!
You're welcome!
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Arty, Thanks for the help. You are my DT goto expert!
Thanks
Robert Freeland
Louisville, Kentucky
I'm Sooo new to this that I have to learn everything and man, do you cover a lot. Thanks
🔥
You deserve a slow clap
Best guy to explain complex concepts👌🏽👍🏽
Your teaching is so clear , appreciate sir .... Need more from your part.
lol need more from me lol
The Ultimate 1 Minute Scalping Strategy: Trading with Support and Resistance
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This is the best video on leverage.
Thank you 💪
This is the kind of person we need to give attention to as a new to traders
thank you!
You are very good man like best , can clear understend , thank you very much
Somehow I understand your explanation better. Thank you sir.
You’re welcome
Super easy to understand for the new day trader. Appreciate your time and dedication for the new average day trader 👌👌👍👍
Always welcome
You are my teacher and physician. Thank you very much.
You are very welcome
I could not have chosen a better time to stumble on a forex channel this good. This is the first one I've ever subscribed to. Keep up the good work.
Hey Artie i have a question tho. Does leverage matter if im already calculating the lot size in respect to the SL size to be 0.5, 1% of my capital?
This is incredibly eas to follow. Thank you!
You're very welcome!
Seriously Thank you 🙏
Now everything clear!!!Thanks!
Glad it helped!
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great as always
Nice video bro, I would suggest u include a breakdown of how much a position can cost you based on the leverage of your account
I’ll put in the next video I do on leverage
@@TheMovingAverage I have a $1500 account. What's the best and safest lot size trading gold with a 1-500 leverage? The best lot size info I what I really need to know. Thanks in advance.
@@TheMovingAverage Please
Hey,
Thank you for posting this video.
I’m copying trades from a broker that says we do 1:500 off 1:200 leverage. He runs a trading group. I do small amount of money in my account.
Best regards / Viktor
You’re welcome
one thing i know is you are very talented teacher i am waiting to see the video of how to trade automaticaly
ty
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And can you please also suggest the best leverage for a small account?🙃
Bro in have watch sooooooooooooooooooooooooooooooooooooooooooooooo many video to understand this and I finally get it thank U sooooo much I'm definitely gonna join the trading floor
Most welcome 😊
Best explanation thank you
superb content
thanks
Definitely derserve a thumbs up and a Sub📍
Thanks ,,,, i learn every time i click on your channel
A very good explanation on leverage. Thank you sir
Most welcome!
really appreciate, well structured and well said in a small time...........thanks for your time .......
My pleasure
Im here starting out. See you in 24 months with my progress!
I love your content!
🔥
I got that right because of you %💯 thanks
Sweet good to hear
If I have any questions I ALWAYS search your videos 🙌🙌!!
What calculators can calculate how many pips needed for a certain profit using leverage along with the this along with the amount of pips that bring you to the “point of liquidation”?
Finally someone explains this properly
👍
As we know, leverage plays a big role in lot size and positions.
My question is, does leverage affect your Pips and earnings? For example; leverage 1:5, Pips:100 and Lot:1 He gives you $500. While the leverage is 1:100, Pips: 100 and Lot:1 gives you: $1000. Is it like this or is it different?
Thank you
Thank you so much. I actually operates a few years, but always get confused when I open a new account
No worries!
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Im 15 and im starting in the trading world. I didn't understand this topic, but i saw you video and all my doubts gone, thanks :D
You are welcome
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Very informative
It was really helpful
Great video. Great explanations. Cool computer setup. Subscribed.
Awesome, thank you!
You are GREAT! Thank you
You're welcome! 😉
Thanks a lot, very helpful ❤❤❤
You're welcome 😊
There is numbers of video that liked i\on youtube and this is the one of them.
Thanks for sharing knowledg.
Wow, thanks!
thanks man! 👍🏼
You bet!
Very clear explanation. Thank you.
You are welcome!
Love your explanations, and videos. Can you explain about Balance:
Equity:
Margin:
Free margin:
Margin level:
Got really confused which one is my money and which one is going to make money with the trade.
Thanks in advance
Please do video on this said words
very helpful thanks!
You’re welcome
Well explained :) ... cheerzzzz
Sir this video is God. Please continue to save lives.
WOW thanks
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thank you, Arty. wow, about the spoon - awesome. before the taking the actual spoon I will use your free training spoon- (to watch all your free videos from beginner playlist to make later the actual spoon more helpful) ;)
Have fun!
What I don't understand and I would love for someone to explain it. He said 'not only do you have more buying power but you are risking less of your own money' but surely if the trade goes bad and you lose that money you would owe the broker the leverage money that you lost. So by definition you still have the potential to lose the exact same amount of money as if you were going to just put all the money up front. There's no difference?
Thanks for the video !
You’re welcome 😉
Thanks ....sir..... to clear the knowledge of Pips in short..
You’re welcome
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Thanks 🙏 You won my subscriber ❤❤
Awesome, thank you!
I love the way you teach
Thank you
You are very welcome
By far the best video, however I still don’t how much of your money has been placed to buy the exchange?
I mean when you buy, how do I know how much I have bought? Or how much I have placed order if i making sense
thank you so much sir ❤❤❤ love you from India 🇮🇳
No, thank you
Thank you so much.
🙏
Thank you sir. What’s that orange application you use ? What’s that broker?
hi, I could not find the link for the pip calculator as you said in this video?
thanks for sharing 🙌
My pleasure
Best one champ
Thanks as well
No problem 👍
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