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When you use leverage to trade the forex market your returns can be much higher than most typical non leveraged investments or non-leveraged trading. You only have to put up a small amount of money to control a much larger amount. Small movement can result in much larger percentage profits. Losses can be managed with stop orders and moving stops to breakeven. To open a leveraged position, you only need to deposit a fraction of the total trade value, called the margin<\/strong><\/em>.\u00a0<\/p>\n Account balance: $10,000 USD<\/p>\n Pair: EUR\/USD Buy<\/p>\n Deposit Amount for Trade: $1000 One Standard Lot<\/p>\n Leverage:\u00a0100:1\u00a0<\/p>\n Position size: $100,000 which is $1000 x 100<\/p>\n Scenario: Market moves +75 Pips In Your Favor<\/p>\n Profit: $750<\/p>\n Return on Investment: 75% which is $1,000 profit divided by $1,000 initial investment<\/p>\n Total Return on Account: Since account starting balance is $10,000 return on account including non-margined funds is $750 divided by $10,000 which is 7.5%.<\/p>\n If you make 4 trades in one month with 75 Pips return each on EUR\/USD your account balance will be $13,000 at the end of the month which is a 30% return on the total account.<\/p>\n USD IMAGES READY<\/strong><\/p>\n Account balance: $10,000 USD<\/p>\n Pair: GBP\/JPY\u00a0Sell<\/p>\n Leverage:\u00a050:1\u00a0<\/p>\n Deposit Amount for Trade: $2000 One Standard Lot<\/p>\n Position size:\u00a0$100,000 which is $2000 x 50<\/p>\n Scenario: Market moves +200 pips in your favor\u00a0<\/p>\n Profit: $133 sounds way too low<\/p>\n Return on Investment: 6.6% which is $133 profit divided by $2,000 initial investment.<\/p>\n Total Return on Account: Since account starting balance is $10,000 return on account including non-margined funds is $133 divided by $10,000 which is 1.33 %.<\/p>\n If you make 2 trades in one month with 1.33% return each on GBP\/JPY your account balance will be $10,266 at the end of the month which is a 2.66 % return on the total account.<\/p>\n GBP\/JPY IMAGES READY<\/strong><\/p>\n Risk Management<\/p>\n these examples are simplified to focus on the mechanics of leverage in forex gains.<\/p>","protected":false},"excerpt":{"rendered":" When you use leverage to trade the forex market your returns can be much higher than most typical non leveraged investments or non-leveraged trading. You only have to put up a small amount of money to control a much larger … Continue reading Example Leveraged Forex Trading Return Calculation #1:<\/h2>\n
Example Leveraged Forex Trading Return Calculation #2:<\/h2>\n