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Routes through the courseSeven lessons on what leverage actually borrows, what margin is held against it, and what a stop out looks like.

Understand leverage without emptying an account

Lessons on this route

7 lessons

  1. 1 · Lesson 1.7

    Leverage and margin: how much of the trade is yours

    Leverage sets how large a position your deposit can hold. Margin is the part of your money locked against it while the trade is open.

  2. 2 · Lesson 1.4

    Lots: standard, mini and micro

    A lot is how much of the instrument one trade controls. Standard is 100,000 units, mini is a tenth of that, micro a hundredth.

  3. 3 · Lesson 1.9

    Stop loss and take profit

    Two instructions you attach to a position: one closes it at a loss you chose in advance, the other at a profit you chose in advance.

  4. 4 · Lesson 3.1

    Risk per trade: the 1-2% rule

    Deciding the money you can lose on one trade before deciding anything else. Everything downstream — size, stop, target — follows from that number.

  5. 5 · Lesson 3.2

    Working out position size

    Risk in money, divided by the stop distance in pips, divided by pip value. Three numbers you already have, in that order.

  6. 6 · Lesson 3.4

    Drawdown and losing streaks

    How far an account falls from its peak, and why a run of losses is normal rather than evidence that something broke.

  7. 7 · Lesson 3.5

    Margin call and stop out

    The two thresholds at which a broker warns you and then closes your positions, and the numbers that bring an account to them.

Who the route is for and what to prepare

This route is for someone who has opened a chart, seen the word leverage, and felt that a larger position might be the answer to a small account. It is written for readers in India who trade or plan to trade USD/INR, a pair quoted around 83.2500, through a broker regulated by SEBI. The lessons assume no prior knowledge of margin, lots or stop orders. They assume only that the reader can place a basic buy or sell order and wants to understand what the broker is lending before using that loan.

Before starting, have three things ready. First, a broker account that offers USD/INR and states its margin requirements in writing; these requirements vary between brokers, so read the specific contract specifications rather than a general guide. Second, a way to fund the account by UPI or bank transfer, so the reader knows how money enters and leaves. Third, a notebook or spreadsheet for recording each practice trade: entry, stop, lot size, margin held and the result. The route is not about making a profit on the first attempt; it is about building a record that shows what leverage did to the account.

The order matters because each lesson removes a misunderstanding that would make the next one useless. Leverage and margin comes first because without it, lot sizes are just numbers. Lots come next because position size is counted in them. Stop loss and take profit follow, because a stop is what turns an unlimited loss into a known one. Only then does risk per trade make sense. Position size is the arithmetic that joins the stop to the account. Drawdown and losing streaks show why that arithmetic must survive a bad run. Margin call and stop out show what happens when it does not.

What the route asks the reader to do, and in what order

Work through the seven lessons in the sequence given, but treat each one as a task rather than a reading. After the first lesson, write down the margin your broker holds for one standard lot of USD/INR and express it as a percentage of the contract value. After the second, convert that lot into mini and micro units and note the margin for each. These two notes become the reference for every later calculation. Do not move to stop losses until you can say, without looking, how much of a USD/INR position is yours and how much is borrowed.

The middle lessons are done on paper or in a demo account, not with real money. Choose a stop distance in rupees, pick a lot size, and calculate the loss if the stop is hit. Then apply the 1-2% rule to an account balance you are willing to name, and see whether the lot size fits. If it does not, reduce the lot until it does. Repeat this with three different stop distances. The aim is repetition, so that position size becomes a calculation you perform before the trade, not a guess made after it.

The final two lessons are about survival. Take the practice record you have built and look at the worst sequence of losses. Ask whether the account could have continued through it. Then read the margin call and stop out lesson with your own numbers beside you: the margin held, the equity left, and the level at which the broker would close the position. Finishing the route does not make anyone profitable. It gives a reader a written method for sizing a trade, a record of how that method behaves in a losing run, and a clear picture of the point at which the broker will act.

Mistakes made while following the route

The most common mistake is to treat leverage as extra buying power rather than borrowed money. A reader may calculate the margin correctly and then use the largest lot the margin allows, ignoring the stop distance. That reverses the order of the route. The stop and the risk limit come first; the lot is the result. Another mistake is to change the account balance between lessons, so the 1-2% figure moves and the position size cannot be compared with earlier practice. Keep one balance for the whole route, even if it is not the balance in a live account.

A second mistake is to skip the losing-streak lesson because it feels theoretical. In practice, a run of losses is where leverage does its damage: each loss reduces equity, which reduces the margin available, which may force a smaller position just when the reader wants to recover. Readers who skip this lesson often abandon the method after three losses and return to guessing. The route asks for the streak to be studied on paper first, so that the emotional effect is met before real money is involved.

A third mistake is to look for a broker recommendation or a signal while working through the lessons. This route contains neither. Margin rules, lot sizes and stop-out levels vary between brokers, and a figure copied from another site may not match the reader's own contract. The correct source is the broker's own specification, read alongside the lesson. If a number cannot be found there, note it as unknown and continue; do not fill the gap with a figure from memory. The route is complete when the reader's own numbers are written down, not when someone else's are memorised.

Doing it once, step by step

The reader will work through the route in one sitting or across a week, using USD/INR and a single practice account balance, and will finish with a written position-size method and a record of how it survives a losing run.

  1. 01

    Open the contract specification for USD/INR

    Find the margin requirement and the contract size for USD/INR at your own broker. Write both figures down, along with the price around 83.2500. Do not use a figure from another broker, because these terms vary. This note is the base for every calculation that follows.

  2. 02

    Convert one standard lot into mini and micro units

    Using the contract size from the specification, write the number of units in a standard, mini and micro lot. Note the margin held for each. Keep this table beside you for the rest of the route. It removes the need to guess a lot size later.

  3. 03

    Set a practice stop distance and calculate the loss

    Choose a stop distance in rupees, for example 0.2500 on USD/INR, and calculate what that loss would be for each lot size in your table. Do this for three different distances. The result shows how the stop, not the leverage, decides the money at risk.

  4. 04

    Apply the 1-2% rule to one fixed account balance

    Name a practice account balance and calculate 1% and 2% of it. Compare those figures with the losses from the previous step. Choose the largest lot size whose loss at your stop stays within the limit. Write the choice down as your position-size rule.

  5. 05

    Record a losing streak on paper

    Assume five losses in a row at your chosen size and stop. Subtract each loss from the account balance and recalculate the 1-2% limit after every loss. Note how the permitted lot size falls as equity falls. This is the drawdown lesson applied to your own numbers.

  6. 06

    Find the stop-out level and mark it

    Read your broker's stop-out percentage and calculate the equity level at which it would close your position. Write that level beside your practice balance. Finishing the route means you can state your margin held, your risk per trade, and your stop-out level without looking them up.

Questions that come up next

How much money do I need before I can start this route?

There is no fixed figure, and any number you read elsewhere is not yours. What you need is enough in the account to hold the margin your broker requires for the smallest lot you intend to trade, plus a buffer so one losing trade does not consume the whole balance. Because margin requirements vary between brokers, check the contract specifications for USD/INR at your own broker and work from that figure. Start with the smallest lot available, so the amount at risk stays small while you learn.

Can I follow the route using a demo account instead of real money?

Yes, and the middle lessons are best done that way. A demo account lets you place USD/INR orders, watch margin being held and see a stop loss trigger without losing rupees. The arithmetic is identical to a live account, so the position size you calculate in lesson five is the same calculation you would use with real funds. The one thing a demo cannot teach is how you react when the money is yours, which is why the final lessons on drawdown and stop out are worth reading before you fund anything.

What happens if my account falls below the margin my broker requires?

The broker issues a margin call, asking you to add funds or reduce the position. If the account value keeps falling, the broker may close positions automatically, which is a stop out. The exact level at which this happens is set by the broker and varies between them, so read your own agreement rather than assuming a standard figure. Closing happens at the market price at that moment, which may be worse than the level you expected.

Does using leverage increase the chance of making a profit?

No. Leverage increases the size of the position and therefore the size of both gains and losses, in the same proportion. A trade that would have lost a small amount without leverage can lose several times that amount with it. The route exists to make that relationship visible before it is tested with money, not to suggest that borrowing improves the outcome.

How do I add money to the account while working through the lessons?

Funding is normally done by UPI or bank transfer, and the broker will state which it accepts and how long a transfer takes to appear. Keep the amounts small while you are still on the early lessons, because the point at that stage is to observe margin being held, not to trade a meaningful sum. Record each deposit in the same notebook as your practice trades, so the account history stays complete.

What should I do if I finish the route and still do not understand margin?

Go back to the first lesson and redo the written exercise: state the margin your broker holds for one standard lot of USD/INR as a percentage of the contract value. If that figure is not clear, the later lessons cannot be either, because every calculation rests on it. There is no penalty for repeating a lesson, and the notebook you kept will show exactly where the confusion started.

The words used on this page

Leverage
Leverage is the borrowing a broker provides so a position can be larger than the cash you put up. It multiplies the effect of a price move on your account, in both directions. It does not change the direction of the trade.
Margin
Margin is the portion of your account the broker sets aside as security for a leveraged position. It is not a fee and it is not lost when the trade opens. It is released when the position closes, or used to cover a loss if the trade goes against you.
Lot
A lot is the standard unit in which a trade is sized. A standard lot is the full contract, and mini and micro lots are fractions of it. Smaller lots require less margin and move less money per pip.
Stop loss
A stop loss is an order that closes your position at a chosen price if the market moves against you. It turns an open-ended loss into a known one. Without it, the maximum loss is whatever the market does before you act.
Drawdown
Drawdown is the fall from a peak in your account value to a later low. It is measured in money or as a percentage of the peak. A run of losing trades produces a drawdown even when each individual loss was small.
Stop out
A stop out is the automatic closing of positions by the broker when the account no longer holds enough to meet the margin requirement. It is the final step after a margin call. The level at which it happens is set by the broker and varies between them.

What to take away

  • Leverage borrows size, not certainty: it enlarges the loss exactly as it enlarges the gain.
  • Margin is the broker's security, and the amount varies between brokers, so read your own contract specifications.
  • Position size is arithmetic that joins your stop distance to your account, and it is done before the order, not after.
  • A run of losses is normal, and the route exists so your account survives one.
Seven lessons on what leverage actually borrows, what margin is held against it, and what a stop out looks like.Meerayour course guide