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Pip Value and Leverage

  • #1
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  • First Post: Edited Apr 22, 2019 5:32am Apr 20, 2019 6:13am | Edited Apr 22, 2019 5:32am
Hello,

I've been studying trading for 2.5 years now, but still don't understand pip value in relation to leverage. I know that if my leverage is 25:1 and my account size is $1000, then I can trade $25000 or two EURUSD mini lots.

I have two questions:

1) Why do traders say that with having more leverage you can lose more money? Is it because I can trade more lots at the same time?
2) If I chose to open 1 micro lot only, with 25:1 leverage, then how much will my pip value be for EURUSD? Will it be 25 times more, that is, $25? I have no idea?

thanks,
  • #2
  • Quote
  • Apr 20, 2019 8:38am Apr 20, 2019 8:38am
Quoting AttiM
I have two questions: 1) Why do traders say that with having more leverage you can lose more money? Is it because I can trade more lots at the same time?
//------

hey attim..... there is no way i can say why someone else said something..... but your correct, with more leverage you can trade a larger lot size than with the same balance on a lower leveraged account...... and that is probably the number 1 reason for the high failure rate.....

before the time required to handle high leverage passes, most have long been broke.....


Quoting AttiM
2) If I chose to open 1 micro lot only, with 25:1 leverage, then how much will my pip value be for EURUSD? Will it be 25 times more, that is, $25? I have no idea? thanks,
leverage does not effect the pip value..... only the lot size, pair and the account's based currency matters...... for USD based accounts and the EURUSD pair, the pip value for a standard lot is 10$..... mini lot is 1$ ...... and micro lot is 10 cents......

those figures will be different for accounts based in other currencys, gbp, cad, and such ..... the 10 factor will be the same.....
//------

and as you know, but some might not, having a broker with 1000:1 leverage does not force some to use that leverage to the fullest..... nor does 50:1......

leverage here in the states is maxed at 50:1...... all my accounts are at 50:1 but probably half never use over 5:1........ leverage is not the key to success...... control is......h
to trade and code, keep both simple... no call to impress....h
  • #3
  • Quote
  • Apr 20, 2019 9:59am Apr 20, 2019 9:59am
Hi hayseed, thanks for the swift reply.

So, are you saying that on a $1000 account and 100:1 leverage if I trade (EURUSD) only 5 Mini Lots it's like using half of the available leverage or 50:1? In this case the combined value of pips is $5 right?

attim
  • #4
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  • Apr 20, 2019 12:29pm Apr 20, 2019 12:29pm
Quoting AttiM
Hi hayseed, thanks for the swift reply. So, are you saying that on a $1000 account and 100:1 leverage if I trade (EURUSD) only 5 Mini Lots it's like using half of the available leverage or 50:1? In this case the combined value of pips is $5 right?
//-----

hey attim...... let me answer in inverse order......

In this case the combined value of pips is $5 right?

yes..... 5 EURUSD mini lots in a USD based account would be 5$ a pip regardless of the account leverage......

So, are you saying

no that's not what i meant...... but what you said is almost correct....

a $1000 account with 100:1 leverage is in effect a $100,000 account....

a $1000 account with 50:1 leverage is in effect a $50,000 account....

roughly speaking, you can trade twice as many mini lots on a 100:1 account as you can in a 50:1 account......

trading 2 mini lots in a 100:1 account is similar to trading 1 mini lot in a 50:1 account in terms of margin required only.....
//------

now for a second think in terms of margin required, which varies with pairs and brokers..... it's far more important.....

the margin required for a EURUSD mini lot is $230 in a 50:1 account..... so, the max number of mini lots you could trade would be 4 in a $1000 account..... (4 x 230) = $920.....

the margin required for a EURUSD mini lot is $115 in a 100:1 account..... so, the max number of mini lots you could trade would be 8 in a $1000 account..... (8 x 115) = $920.....

so yes, if you traded 4 mini lots in the 100:1 account, it would be roughly similar to using half your leverage, or like a 50:1 account......
//-----

now what i was saying in the prior post was to trade small regardless of leverage....... it's ok to have 100:1 leverage and not use it... in other words trade only 0.01 size lots...... or 0.02 max....

you'd be surprised how fast 0.02 trades can double $1000......... and how fast 0.1 can cut it in half.......h
to trade and code, keep both simple... no call to impress....h
  • #5
  • Quote
  • Apr 20, 2019 10:37pm Apr 20, 2019 10:37pm
Quoting AttiM
In this case
//------

below is a script, so it goes in the scripts folder..... it will show the pip value, margin required, max lots and such, on the pair you put it on.....

the same can be done in dashboard style to easily compare values between pairs.....h
//-----
Attached Image (click to enlarge)
Click to Enlarge Name: attim.png Size: 100 KB
Attached File(s)
File Type: mq4 trade small.mq4   3 KB | 382 downloads
File Type: ex4 trade small.ex4   7 KB | 315 downloads
to trade and code, keep both simple... no call to impress....h
  • #6
  • Quote
  • Apr 21, 2019 10:36am Apr 21, 2019 10:36am
Hello hayseed,

Quoting hayseed
{quote} it's ok to have 100:1 leverage and not use it... in other words trade only 0.01 size lots...... or 0.02 max.... you'd be surprised how fast 0.02 trades can double $1000......... and how fast 0.1 can cut it in half.......h
Questions:

1) So, if you trade a 0.01 size (Micro Lot) in a $1000 Account and 100:1 Leverage, then it抯 like trading a Mini Lot isn抰 it? I am not sure if I got this right?br />
2) Also I got a bit mixed up. The question I asked you in Post 3 is very similar to your answer
so yes, if you traded 4 mini lots in the 100:1 account, it would be roughly similar to using half your leverage, or like a 50:1 account......
What is the difference? What is it that I don't see?

3) Thanks for the script. What's the equation that you use for max. lot calculation? Do you mind sharing that with me and/or with the readers?

thanks for tips and explanations

AttiM
  • #7
  • Quote
  • Apr 21, 2019 8:53pm Apr 21, 2019 8:53pm
Quoting AttiM
Questions: 1) So, if you trade a 0.01 size (Micro Lot) in a $1000 Account and 100:1 Leverage, then it’s like trading a Mini Lot isn’t it?
//----

hey attim..... if you trade 0.2 mini lots in a $1000 account with 100:1 leverage, it is roughly similar to trading 0.1 mini lots in a $1000 account with 50:1 leverage..... it's not exactly the same but the math is correct....


Quoting AttiM
2) The question I asked you in Post 3 is very similar to your answer {quote} What is the difference? What is it that I don't see? 3) Thanks for the script. What's the equation that you use for max. lot calculation?
//----

yes, they are similar.... the way your question is worded it is difficult for me to see the question.... that's why i had to bring in (marginrequired) in to better explain the difference....

note i keep saying roughly similar, because there are other issues that have not been mentioned.....

the equation is , (AccountFreeMargin()/MarketInfo(Symbol(),MODE_MARGINREQUIRED)......
//-----

unless you are trying to decide on whether a 100:1 or 50:1 account is best for you, comparing the two might be nothing more than confusion.....

it really does not matter which you choose if you maintain control......h
to trade and code, keep both simple... no call to impress....h
  • #8
  • Quote
  • Oct 13, 2024 7:58pm Oct 13, 2024 7:58pm
Quoting hayseed
{quote} //------ below is a script, so it goes in the scripts folder..... it will show the pip value, margin required, max lots and such, on the pair you put it on..... the same can be done in dashboard style to easily compare values between pairs.....h //----- {image} {file} {file}
Hey buddy, I would like to know more about pip value calculation. I haven't tried it yet, but If you have used it you may tell me your experience.

Thanks,
amugisha.
  • #9
  • Quote
  • Oct 14, 2024 3:08am Oct 14, 2024 3:08am
Quoting amugisha
{quote} Hey buddy, I would like to know more about pip value calculation. I haven't tried it yet, but If you have used it you may tell me your experience. Thanks, amugisha.
hey buddy, I am also starting out on this and so I don't feel confident enough to explain to you but I believe this YT video should help.-
Inserted Video
  • #10
  • Quote
  • Oct 17, 2024 2:02pm Oct 17, 2024 2:02pm
Don't see anything difficult with pip value because, for 1 lot is 10 units of base currency, so you multiply this amount by the lot size to calculate pip value and then, if you need, convert it to USD using respective exchange rate.
  • #11
  • Quote
  • Oct 21, 2024 6:22pm Oct 21, 2024 6:22pm
Quoting amugisha
{quote} Hey buddy, I would like to know more about pip value calculation. I haven't tried it yet, but If you have used it you may tell me your experience. Thanks, amugisha.
//------

hey amugisha...... that was script i wrote for someone else......yes, i used something similar......

it's written for metatrader 4...... using mq5 now.......

in most cases we memorize all those values....... so scripts and indicators will no longer be needed......

eventually you do the math in your head.....h

//------

Attached Image (click to enlarge)
Click to Enlarge Name: Screenshot 2024-10-21 051440.png Size: 44 KB
to trade and code, keep both simple... no call to impress....h
  • #12
  • Quote
  • Oct 22, 2024 10:27pm Oct 22, 2024 10:27pm
Quoting hayseed
{quote} //------ hey amugisha...... that was script i wrote for someone else......yes, i used something similar...... it's written for metatrader 4...... using mq5 now....... in most cases we memorize all those values....... so scripts and indicators will no longer be needed...... eventually you do the math in your head.....h //------ {image}
Yep doing math is the way. but I have seen mt5 made it easy to know exactly the amount going to be risked per trade.
  • #13
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  • Last Post: Dec 18, 2025 11:45pm Dec 18, 2025 11:45pm
Leverage mainly affects how big a position you抮e allowed to open, not the pip value itself. People say higher leverage means you can lose more because it lets you open larger positions. Larger positions have bigger pip values, so your gains/losses swing more. If you only open 1 micro lot of EURUSD, the pip value stays about $0.10 per pip, no matter if your leverage is 25:1 or anything else.
Leverage just changes how much margin is required, not how much each pip is worth. Hope that helps.
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