Topic: How really work the leverage in the Magnr's platform? (Read 390 times)
Very interesting observation. can you elaborate on just one small thing for me? I did not understand the parts between, "Hi everyone!" and "Thank"....
Hi everyone!
I’d like to know how EXACTLY the leverage of the Magnr’s plataform influence the operation of trading.
Exist an incorrect explanation spoken by fool ‘traders’ that leverage multiply the gain and the loss. This is INCORRECT!
You can create two demo accounts in any forex broker, one with leverage 500:1 and another with leverage 1:1, and test these accounts in the MetaTrader, making operations with lot = 1. In both accounts, the leverage doesn’t multiply the profit or the loss.
Mathematically, exist a formula for calculate the position size (= lot = volume) and this formula doesn’t depend of the leverage.
[trading capital] x [percent to risk]/100
lot = -------------------------------------------------------
[pips between entry and stoploss] x [dollars per pip]
The – ONLY – function the leverage is up the maximum limit of the lot. How bigger is the leverage, bigger will be the maximum limit of the lot. JUST IT!
If you have an account with just 1000 USD and your leverage is 1:1, probably the maximum limit allowed for you will be 1.00, or maybe 0.5. Now, if your leverage is 500:1, so your maximum limit will be 5.00, or maybe 10.00, or maybe 15.00. It’s depends of the broker…
So, now I repeat my question above: “How – EXACTLY – the leverage of the Magnr’s plataform influence the operation of trading??”
Thank
I’d like to know how EXACTLY the leverage of the Magnr’s plataform influence the operation of trading.
Exist an incorrect explanation spoken by fool ‘traders’ that leverage multiply the gain and the loss. This is INCORRECT!
You can create two demo accounts in any forex broker, one with leverage 500:1 and another with leverage 1:1, and test these accounts in the MetaTrader, making operations with lot = 1. In both accounts, the leverage doesn’t multiply the profit or the loss.
Mathematically, exist a formula for calculate the position size (= lot = volume) and this formula doesn’t depend of the leverage.
[trading capital] x [percent to risk]/100
lot = -------------------------------------------------------
[pips between entry and stoploss] x [dollars per pip]
The – ONLY – function the leverage is up the maximum limit of the lot. How bigger is the leverage, bigger will be the maximum limit of the lot. JUST IT!
If you have an account with just 1000 USD and your leverage is 1:1, probably the maximum limit allowed for you will be 1.00, or maybe 0.5. Now, if your leverage is 500:1, so your maximum limit will be 5.00, or maybe 10.00, or maybe 15.00. It’s depends of the broker…
So, now I repeat my question above: “How – EXACTLY – the leverage of the Magnr’s plataform influence the operation of trading??”
Thank
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