Leverage and Margin

Now that we know what a pip is, we know that it is just a teeny amount, so you need to trade a LOT for these tiny PIPs to really make a difference.

‘Leveraging lets you magnify your profit potential, at the risk of greater losses, through allowing you to control a relatively large asset for a fraction of its cost’

Example:  3.33% margin deposit means you are trading 30 times leverage, for example;

Buying 1 lot of GBP/USD @ 1.31971 with a margin requirement of 3.33% will cost you $4,394.63.

The margin requirement means that you can trade a volume of $100,000 in the market.