This implies that you can initially place a maximum of 250,000 (5,000 x 50) in currency trading positions. What if you had only traded the 5,000 without using any leverage? While leverage can be beneficial, it can also lead to disastrous outcomes. The value of each pip is expressed in USD, since this is the counter currency or" currency. Once your trade drops to 1000 in losses your position is automatically cashed out. You only get 500 USD each month, and that's before any taxation.
Please try again later. However, this figure already includes marginal trading. Traders usually consider 1,000 USD to be a decent starting sum. But this is not a 100 beneficial condition as you also expose yourself to risk. The success of your first trade has made you willing to trade a larger amount, since you now have USD 7,000 as margin in your account. Of course, the same applies to losses. The fact is, most accounts for "normal" people require leverage because the size of the typical contract is more than the average person can afford to risk (or usually more than the average person has). It is important to ensure your trading strategy considers your deposit amount, how much you are willing to lose and the minimum you are willing to make - before you start leveraged trading.
Strategic stops are of utmost importance in the around-the-clock forex market, where you can go to bed and wake up the next day to discover that your position has been adversely affected by a move of a couple hundred pips. On major currency pairs of 50:1, which means that for every dollar you put up, you can trade 50 of a major currency.