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The Ratio between Minimal Lot Size, Trade Size and Leverage

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Fundamentally, the minimal lot size for a trade is $10,000. Thus the leverage limitations are set according to the amount you choose to trade, for instance, for the above lot of 10,000$ for a trade size of 25$ the maximum leverage is 400, for 50 the leverage is 200 and for trade of 100$ we have the leverage of 100.

The advantage of trading with Leverage is that while your profits potential is virtually infinite but your loss is limited to the amount of your initial investment. Once the rate drops below the rate covered by your investment, the trade is automatically closed. That is done through an automatic Stop Loss.

Remember, Leverage can be a trader’s best friend when used carefully, and his worst enemy when used recklessly. It is a great tool for increasing profits, in fact private traders rarely trade without it, but you should always keep in mind that the higher the leverage is – the higher the risk level involved.

Finally, note that many brokers offer mini and micro lots.

Read the "Forex Leverageholic Review"  here

Top Forex Brokers Reviews here

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