JoymistaWhat Is Leverage in Trading?
Leverage lets you open a trade bigger than your balance by putting up only part of it as margin; 1:100 means margin of 1% of the trade’s value.
Explained
Leverage does not change the pip value or the profit and loss of a given size; it changes the margin needed to open that size. High leverage therefore allows sizes large enough to wipe out an account on a small move. What really sets your risk is the trade size compared with your balance.
Example
Example with made-up numbersOne standard lot of EUR/USD at 1.1000 is worth 110,000 dollars. At 1:100 leverage the margin needed is 110,000 ÷ 100 = 1,100 dollars.
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Open in JoymistaEducational content, not investment advice.