Currency trading is associated with so many intricacies that often traders find it difficult tocope up with. Traders in many forex forums face the general question whether leverage is related to volume size. In MetaTrader 4/5, volume size is the lot size or the amount of currencies that you buy/sell. Leverage however is the ratio of your lot size that your Forex broker provides you. MetaTrader volume size can mean a mini lot, micro lot or even a standard lot with no fixed upper end.
What is volume size in MT4/5?
A standard lot means you are dealing with 100,000 units of currency. A mini lot refers to 10,000 units and micro lot represents 1000 units. While there are yet smaller lot sizes, traders tend to trade with at least a micro lot for bonus offers. Pips are the smaller blocks of currency a change in which will determine your profit amount.
If trader A is willing to trade with USD/JPY (at a specific exchange rate), he will be offered a small percentage (1/100=0.01) of the exchange rate as the value of one pip. So a change in direction of pip in the positive side will earn him 0.01*exchange rate.
How can MetaTrader volume size affect your trading?
Determining the trade size can affect risk management:
Veterans are of the opinion that you should risk only a small percentage of your investments. Say that you are using MT4 for currency trading. Your forex terminal will determine the risked amount automatically and display it. So if you are investing $1000, you should not exceed risking more than $10 at a time.
Using stop loss and support levels:
Calculate your stop loss and find out the perfect position to exit in case markets move against you. Normally traders use support and resistance levels to determine this. Some indicators like Fibonacci and Ichimoku cloud indicators help understand when and why to stop.
MetaTrader volume size – a double edged knife?
Although bigger lot sizes pave the way for larger profits, it also means higher risks of losing money. Wrongly interpreting the market might turn out to be disastrous. Hence positioning and proper usage of leverage amounts should be incorporated.
Experts are of the opinion that too high leverage amounts might pose bigger threats. Just like profits, losses might also appear in leaps and bounds. MetaTrader volume size windows provide information of your account usage and the expected possibilities that can use.
Helps manage your financial operations with ease:
Liquidity controls everything in currency markets. It is only because of a liquid capital market that traders can use larger volumes of currency. Constant demand and supply of each of the currencies in pair thus carries trading forward.
But what if volatility goes against your favor? You need a financial manager. Forex brokers generally provide financial services which aid traders to understand the need for and consequences of higher leverages and larger lots.
Forex market trades with more than some trillion amounts of currency every day. But not everyone can win. But you can if you are wise on your choice of technical operations. Above all your Forex terminal should be intuitive and easier to use. The MetaTrader volume size display helps you out with that.
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