Interactive Broker's FX leverage ?

Discussion in 'Forex' started by jjk2, Jan 28, 2008.

  1. jjk2


    is it 50:1 ?

    so going long a million dollars on eur/usd would be around 100 bucks a pip ?
  2. No, it means that with $1 you can buy $50. You place $1, the broker lends you $49.

    For a $1,000,000 lot, you place $20,000; the broker $980,000

    For the same $1M lot, each pip (1/100th of 1% for EUR/USD) equals $100.

    Assuming 2 pips spread, for the 1M lot you pay $200.

    Be aware that with 50:1 an adverse move of only 2% (200 pips) would blow off the 100% of your money. (Actually you'll be liquidated after 100 or 150 pips move).

    By the way don't be suckered into bucket shops that charge a higher spread, yet fool naives saying "with our smaller lots a pip costs you $X less than other brokers".
    Yes a pip is less expensive, true, but with smaller lots you need to buy more lots for the same money, therefore paying higher commissions overall.

    Feel free to ask is you have more questions.
  3. Huh :confused:
  4. Yes.....But you might be better off buying futures instead. Currently the buy/sell spread on the CAD Mar08 future contract is 1 tick, but it's 30 ticks with IDEAL USA CAD.USA.