Lot and Leverage - ForexTradingRoom tv



http://ForexTradingRoom.tv - The home to Free Live Trading Sessions http://ForexProAnalytics.com http://SmartForexTraders.com How does leverage affect pip value and standard lot size in forex. Lot and leverage - forex trading room . TV Understanding lot and leverage. Forex trading is done entirely on a software platform. Digits and currencies are tracked by computers that create a layout with which you can choose to either buy or sell. The popularity of forex arises from the market being open hours a day. Forex traders can trade on any of the major foreign currency markets. Trading sessions begin in Sydney at ten a.m. Monday morning and ends in New York on Sunday at five p.m. eastern time. During those times traders exchange currency by selecting how many units they want to buy and sell. The quantity of trading volume in a currency exchanges is measured by units called lots. They are different from pips in that they represent the amount of quantity in one trade action. A pip is used to represent the differing exchange rate values between the two currencies. A lot is used to represent trade quantity. Think about it as product quantity and product value. The more product you exchange the higher the number in profit and loss. The change in pip value represents the change in the relationship between those two currencies. In technical trading terms a lot refers to the smallest available trade size that you can place on your account. For example something we refer to as a micro lot is 1000 units of currency meaning the smallest trade you can place is 1000 units or one lot. You can place larger trades but the trade size must be an increment of one thousand. Two lots would represent 2000. Lot size or how many units a lot represents is based on the specifications of trading platforms. To add to this type of representation of currency you have a phenomenon known as leverage. This is an extension of a lot in that leverages are multiplied value of the lot on the site of the broker. A broker's amount of leverage measured in a fraction of one is a multiplier in the trade unit quantity. The amount of provided leverage varies based on different platforms. Forex traders use leverage in order to attain a higher profit for their bid and ask quotes. Brokers finance this leverage as a means of maximizing profit through a maximized return on the initial investment. A high leverage ratio means that traders on the platform will have more maximized result on either the profit or loss on a particular trade. This allows the trading value of individual traders to increase with the result of each trading action. The most simplistic way to understand leverages that it works like a multiplier to the result of a bid or ask price. A high leverage ratio will result in a larger multiplier based on a traders bid or ask price point. To learn more about how the forex market operates visit the education section on our website. ForexTradingRoom TV - the number one channel for forex market analysis. Lot and leverage. https://youtu.be/4Wp3SYrFQeo http://ForexTradingRoom.tv - The home to Free Live Trading Sessions http://ForexProAnalytics.com http://SmartForexTraders.com

Comments

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