How Does Forex Leverage Affect Pip Value?
The leverage used in forex trading also affects pip value as the amount of leverage used to open a forex trade transaction.
The forex trading leverage used in a forex account will also determine the forex trade size & this will in turn affect the pip value profit or loss for the trade opened.
Example 1: for example if a trader with $1,000 uses leverage 100:1 the pip value per trade will be:
$1,000*100:1 = $100,000
A trader can open a trade with $100,000 which is 1 standard forex lot - the pip value for this trade will be:
$10 per pip.
Example 2: for example if a trader with $1,000 uses leverage 50:1 the pip value per trade will be:
$1,000*50:1 = $50,000
A trader can open a trade with $50,000 which is 0.5 standard forex lot - the pip value for this trade will b:
$5 per pip.
Example 3: for example if a trader with $1,000 uses leverage 10:1 the pip value per trade will be:
$1,000*10:1 = $10,000
A trader can open a trade with $10,000 which is 0.1 standard forex lot or 1 Mini Lot - the pip value for this trade will be:
$1 per pip.
To Learn More about Forex Leverage and Margin - Read the Topics Below:
Forex Leverage & Margin Described
