Easy Forex Videos in Urdu
In this easy forex video we will cover these topics Lot Size, Margin and Leverage. Most forex brokers today provide up to four categories of lot sizes for the trader.
1- Standard lot 2 – Mini lot 3- Micro lot 4- Nano lot.
Standard lot Size.
A standard lot is defined as 100,000 units of the base currency. For an example, when you buy 1 standard lot of GBP/USD, you are purchasing 100,000 pounds with U.S. dollars. 1 standard lot = $10 per pip.
Mini Lot Size.
A mini lot is defined as 10,000 units of the base currency. For an example, when you buy 1 mini lot of EUR/USD, you are purchasing 10,000 euros with U.S. dollars. 1 mini lot = $1 per pip.
Micro lot Size.
A micro lot is defined as 1,000 units of the base currency. For an example, when you buy 1 micro lot of USD/CHF, you are purchasing 1,000 U.S. dollars with Swiss francs. 1 micro lot = $0.10 per pip.
Nano lot Size.
A nano lot is defined as 100 units of the base currency. For an example, when you buy 1 nano lot of USD/CAD, you are purchasing 100 U.S. dollars with Canadian dollars. 1 nano lot = $0.01 per pip.
I sum up the definition of leverage in four simple words with easy forex way:
“Doing more with less.” and keep it your mind that financial success is almost always accomplished through the use of leverage. Your broker “lend” you additional capital, although no money changes hands. Brokers can offer wide range of leverage, anywhere from 1:1 to 2000:1
Let ’s see how this works. If the broker provides you with leverage of 100:1, instead of $100,000, all you need to do is to pay $1,000 to trade one standard lot. Sometimes the $1,000 is referred to as margin. It is also the basis of how brokers refer to our trading account as a margin account.
Margin basically allows a trader to purchase a contract without the need to provide the full value of the contract. In the example, $1,000 was the margin required for you to trade $100,000 on a leverage of 100:1. Using a simple formula: Margin required = Lot size / Leverage
for the example:
Margin required = $ 100,000 / 100 = $ 1,000
Margin percentage = Margin amount / Lot size
= $ 1,000 / $ 100,000
= 1 %