Does Higher Leverage Mean Higher Profit in a Trade for the Same Amount of Points - page 2

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Fernando Carreiro #:

Again, you mixing apples and oranges. If you buy a used car for $1000 and then sell it for $1200, you make $200 profit. Does it really matter if you have $2000 or $200000 in savings in your bank account?

No. The amount you have in your account does not matter. What matters is how much you invested and any potential losses you may incur.

If you plan to risk 1% of your account balance on each trade then you need to adjust the volume accordingly.

So, if a stop-loss of 500 points for 0.02 lots gives you a potential loss of $10 (which is 1% of $1000), then for a balance of $2000, you would place an order of 0.04 lots, so that the same 500 points would give you a value of $20 (1% of $2000).

The penny dropped, thank you. Lot size and the amount of points the price changes on the chart has nothing to do with how much money one has in their account. The amount of money you have in the account alongside the leverage, only increase or decrease your potential risk, they don't increase or decrease your profit/loss. The profit/loss is based on the lot size you choose and the amount of points the price moves. And the risk is based on your balance and the leverage. Am I finally understanding this correctly?
 
erwtg4 #: The penny dropped, thank you. Lot size and the amount of points the price changes on the chart has nothing to do with how much money one has in their account. The amount of money you have in the account alongside the leverage, only increase or decrease your potential risk, they don't increase or decrease your profit/loss. The profit/loss is based on the lot size you choose and the amount of points the price moves. And the risk is based on your balance and the leverage. Am I finally understanding this correctly?

Yes, you are much closer to fully understanding it. Just take some time and do some more research so that you can be truely confidant in your understanding of all the nuances.

 
Fernando Carreiro #:

Yes, you are much closer to fully understanding it. Just take some time and do some more research so that you can be truely confidant in your understanding of all the nuances.

That's great to hear, yes sir, I'll do more research. Thank you again Fernando. I appreciate it.
 

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How to calculate take profit from currency

Fernando Carreiro, 2022.09.05 17:00

These are all the same equation written in different ways ...

[Volume]      = [Money Value] * [Tick Size] / ( [Tick Value] * [Stop Size] )
[Stop Size]   = [Money Value] * [Tick Size] / ( [Tick Value] * [Volume]    )
[Money Value] = [Volume]      * [Stop Size] * [Tick Value]   / [Tick Size]

[Volume] in lots
[Stop Size] in quote price change
[Money Value] in account currency
 
Fernando Carreiro #:
That is very useful. Thank you.
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