Lot size and leverage

As a new trader you may be finally getting into the markets and want to trade immediately and in the market for a broker. You may see some brokers offering high leverage or big lot sizes which then makes you wonder what exactly are those and why those matter. Today we will be delving in what lot seizes and leverage are and why these concepts are important when choosing a broker

Lot sizes and leverage is very dependent on brokers so when you are doing research on which broker offers the best lot sizes and leverage for your needs search through the WikiFx app. This app will help you find the best regulated and verified brokers in your country. They also show you which brokers are scammers so that you stay far away from them. They can also help you recover your money if there is any broker misconduct so next time a broker gives you trouble you use WikiFx to get it sorted out.

Lot size refers to the standard used to define how big of a position you are going to take or how much money you are going to be risking. There are four lot sizes which represent the number of currency units you will be using to purchase or sell the against a currency. The four sizes are Standard lot with 100000 currency units, Mini lot with 10000 units, Micro lot with 1000 units and Nano lot with 100 units. These units represent how much of a currency you have bought sold and how much each pip will be valued at. When you enter a broker sign up page they will ask if you want to open according to the four sizes of lot sizes we have talked about above. It also defines the minimum and maximum pip lot sizes you can have per account so if you have small fund perhaps opening micro and Nanos accounts. But if you have more money to invest then go ahead for a standard account

Leverage is a different mechanism that helps traders increase the value of the pips they win or lose. If say a broker offer you a 1:500 leverage it means that at most, you could trade the value of 500 lots using one dollar. Meaning that when you have 1000 dollars you can place a trade of a value of 500000 dollars. This is a double edge sword as fair and fine you get to trade with more money without necessarily having some, but you can also lose your investment even faster and the bigger pip size means bigger loses for you.

So when opening a trading account you chose what type of account its will be then there will be a leverage which is permitted for that account. You can use this in a manner that helps maximize your returns and to decrease your loss. Just make sure that the broker you are using is a reputable one because your funds my be at risk of shady brokers. Some brokers use this tactic to over risk your small account. If you see a broker offering crazy leverage sizes they probably have some shady spread tactics that will stop you out quicker than you can react and take you money. So remember to look through WikiFx for a avoid broker that operates to strict standards and practices.