Leverage, margin, pips and lots


#1

Hi all,

I’ve been looking around on ZuluTrade for a comprehensive source of Information regarding the maths behind margin trading. I found nothing, so I started to figure out some bits and pieces from my observations and my general knowledge about the topic. Here is what I found:

  • for EURUSD one pip corresponds to the fourth decimal digit (0.1234). But how is it for other pairs? Is there a general rule in place or some overview table somewhere?
  • one standard lot is worth $100.000, one mini and one micro lot therefore $10.000 and $1.000, respectively
  • for one standard lot a single pip corresponds to a pnl of ± $10, for one mini and one micro lot therefore ± $1 and ± $0.1, respectively
  • the margin requirement for 1 std lot is $1000 at 100:1 leverage
  • the leverage you set in the account settings has nothing to do with your brokers actual leverage

First of all I want to know if this is correct so far or if there is some source of information I might have overlooked. Thanks!

kind regards,
jan