Leverage is margin per trade quoted as a ratio. In the preceding example, leverage is 50:1 (100,000/2,000). The higher the ratio, the higher your profit (or loss) potential.
Tip: Margin and leverage are simple inverses of each other.
As you can see in Table below (Profit and Loss (in Dollars), on a 100,000 lot a pip is worth $10. With leverage at 50:1 if prices go for (or against) you by 200 pips, you have made (or lost) your entire margin of $2,000, a 100 percent profit (or loss). See Table below (leverage) for profit or loss in dollars of margin against different leverage ratios.
[caption id="attachment_12966" align="aligncenter" width="561"] Profit and Loss (in Dollars)[/caption]
[caption id="attachment_12970" align="aligncenter" width="561"] Leverage[/caption]