- Leverage, and margin portions
To make this little Hundredth worth something, your broker offers leverage. This essentially magnifies your trade size. Would place an operation using both its own money, called Margin, and your broker will extend the operation whatever it leverage. If your broker offers leverage of 100: 1, this means that will increase your trade size by 100 times.
You have to swap pieces of money called lots. Different brokers offer different minimum lot sizes that can be exchanged.
There are 3 lots of different sizes, each makes the value of a pip is worth more or less.
Micro Lot 1 = approximately $ 0.10 per pip
1 mini lot = approximately $ 1.00 per pip
1 batch = approximately $ 10.00 per pip
Open a "micro account" means you have the ability to exchange lots as small as you can get. This is good for small accounts. Most brokers allow micro batch sizes and allow you to open an account for only $ 250.00.
To trade a lot, you have to put some of your own money, this is called margin. Margin required depends on how much leverage. If you are operating an account that offers a 100: 1 leverage, you need approximately $ 10 room to negotiate micro 1 lot. If you are operating an account that offers only leverage 50: 1, you will need approximately $ 20 margin for the same batch micro.
This margin is maintained in good faith by your Forex broker until the transaction closes. You can earn more or less, or you may lose more or less than the margin has. Whatever the case is returned to the bank after closing the transaction. Again, this is done automatically through your broker. You can exchange as many batches as you wish, provided you have the scope to cover them.
## A note on US intermediaries.
Recently, a government agency called Forex CFTC (Commodities Futures Trading Commission) has implemented several restrictions for US-based intermediaries. UU. One of these restrictions is to limit leverage to 50: 1. This means that your broker can only expand its operation 50 times compared to 100 times normal. This should not be a problem in your trading, so do not worry too much about that.
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