How to use leverage ?
If you trade with a leverage of 1:100 the market would have to move 100 points against you for your position to be wiped out. On the other hand, if you trade with a leverage of 1:400 the market would only have to move 25 points against you for your position to be wiped out.
We recommend first opening a position with a low 1:100 Leverage, and only once you see that you've hit a strong trend, consider opening one with a 1:400 leverage.
Minimal leverage
The Ratio between Minimal Lot Size, Trade Size and Leverage
Fundamentally, the minimal lot size for a trade is $10,000, thus the leverage limitations are set according to the amount you choose to trade:
| Trade Size |
Minimal Leverage |
Lot |
| 25 |
400 |
10,000 |
| 50 |
200 |
10,000 |
| 100 |
100 |
10,000 |
The advantage of trading with Leverage is that while your profits potential is virtually infinite, at eToro the maximum amount you can lose on a trade is limited to the initial investment of the trade. (With the rare exception of extreme market conditions) Once the rate drops below the rate covered by your investment, the trade is automatically closed. That is done through an automatic Stop Loss – explained in the next chapter.
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