so you wanna understand leverage trading
and what lot sizes to use and how much
money you're gonna make for each lot
size so you've come to the right place
i'm gonna show you all of the lot sizes
and how to use your leverage account
properly
when trading the forex markets
[Music]
welcome back to the channel everybody my
name is artie and this is the moving
average
a show where we talk about everything
day trading to keep you
profitable on a consistent basis so if
you're new into trading and you want to
understand how leverage works and lot
sizes
i'm going to do my best to explain
everything and give you the tools and
resources that you need to figure it out
on your own
after watching this video but there's
only so much explaining i can do with my
hands so
let's jump onto the charts and i'm going
to show you exactly what i'm talking
about so to first
understand forex you need to understand
what a pip
is if we're looking at the most popular
most traded currency pair
euro usd the current price on it
is 1.17835
meaning that for one euro you would get
1.17836 u.s dollars
a pip is the fourth decimal point so one
two three four this number if it goes up
or down
one digit so it goes to four that means
it's gone
up one pip so if you're looking to get
10 pips out of a trade and you're in a
buy position
you're gonna want this price
1.17935
that'll be a 10 pip profit if you buy
at this price now when it comes to lot
sizes there are three lot sizes to
consider
there is a 0.01 a 0.10
and a 1.00 these three
have different names this is a
standard lot this is a mini lot
and this is a micro lot because it's
small so i'm gonna show you how much
money you're gonna make for each one of
these lot sizes
with one pip there are calculators
online that do this for you
but i'm going to show you if your base
currency is usd
with a micro lot the smallest order that
you can place
on any broker you would make 10 cents
per pip so if you got 10 pips
you'd make a dollar on a .01
lot size and because this number right
here this
mini lot is 10 times bigger than a micro
lot the same goes for the amount that
you would earn
you would earn one dollar per pip
on a mini lot and on a standard lot
because a standard lot is 10 times
bigger than a mini lot
again you would make right here ten
dollars per pip so say you got into a
buy position
and this price went up to 1.17845
and you had one standard lot on it you'd
make 10 bucks
now you might be asking yourself cool i
understand but
what is a standard lot like what is the
unit of measure on that
a standard lot is 100
000 of that currency so basically
to make a one standard lot size order
you have to have a hundred thousand
of that currency so technically you
would need
117 835
dollars like physical dollars to buy
an entire standard lot of that currency
like
like actual money and do that you can
see
that without a leverage account that's
not feasible by the normal person
i don't think that you have a hundred
thousand dollars sitting in your trading
account
let alone 95 of day traders that's where
leverage comes into play
so again a hundred thousand units for a
standard lot
10 000 units for a mini lot and a
thousand units for a micro lot so
understanding that now you can
understand why we need a leverage
account so whatever money you have
is leveraged by a certain amount in
america
you are not allowed above a one to
thirty leverage
so if you have a hundred dollars in your
trading account
and you live in the united states your
leverage is max one to thirty
so instead of a hundred dollars worth of
buying power
you have three thousand dollars worth of
buying power now if you go to an
offshore broker or an unregulated broker
you could get absurd leverage like one
to two hundred
one to five hundred i've even seen some
that are one to two thousand
don't do that ever so basically if you
have
a one to one hundred leverage account
whatever money you have in your account
you have the buying power of 100 times
that
so if you have a hundred dollar trading
account
with a hundred times leverage you have
the buying power of
ten thousand dollars meaning that the
maximum lot size you can do
is a mini lot again this seems super
complicated just because i have this all
scribbled on this chart
but there are calculators online which
i'm going to link down below there are
free websites just type in numbers
and it'll give you the money amount in
your currency so
with a leverage account not only do you
have more buying power
but you're risking less of your own
money yes you may only have a hundred
dollar account
but you can purchase up to ten thousand
units a mini lot
of that currency so you will earn more
money on your trade
because you're playing with more money
on the opposite end of the spectrum you
can also
lose more money quickly but that's why
we have proper risk management skills
that you learned in this video so if you
google any random position size
calculator sometimes i use this one on
forextime.com
basically you type in like i want 10
pips on euro usd
and i'm trading a 0.10 lot size
my base currency is usd so i would see
that from 10 pips
on this lot size on this currency i
would make ten dollars and it works for
every single currency
say for example usd cad it's less money
because you're earning
canadian dollars and that's where it
gets a little bit more complicated it's
not even numbers like i showed you in my
example
that's why calculators are super useful
so just to show you an example i made a
demo trade just now to do
a different lot size position a point
zero one
a point one zero and a one lot size you
can see that picture right here
and you can see how many pips the price
has gone down even though i went in a
buy position
this is how much i would be losing on
each lot size
if you're still watching this video that
means that you like it
so i'd appreciate it if you just hit the
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already
what are you waiting for i appreciate
you guys taking the time to watch these
videos and learn and develop your
trading strategies
so from the bottom of my heart thank you
so much and we will see you
in the next video