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.
Remember, Leverage can be a trader's best friend when used carefully, and his worst
enemy when used recklessly. It is a great tool for increasing profits, in fact private
traders rarely trade without it, but you should always keep in mind that the higher
the leverage is - the higher the risk level involved.
Now that you're equipped with most of the basic tools, you can
open your first trade!