For example, if your deposit amount is $ 1000 and your leverage ratio is 400%( 1:400), the maximum number of hands you can open is 1000 * 400/ 10000 = 4 hands. However, students here must pay attention to the fact that the concept of four hands is based on "you have a maximum opening limit of $65,438+0,000 in your account". However, if students still remember the concept of spread mentioned in last class, they will know that once we open a position, the first thing we lose is spread. Once you lose the spread, you can no longer support your account to hold a 4-hand position. Therefore, 4 lots are only the theoretical maximum opening quantity, and there will be transaction costs in actual opening, so it is impossible to complete the full amount of 4 lots.
Therefore, the understanding of leverage provides us with an opportunity to be small and broad, but it is generally recommended that your open position should not exceed half of the maximum open position. In other words, if your maximum number of positions is 4 hands, then don't open more than two hands at most, otherwise it will be very unpleasant to be forced to close the position by the platform.