If a trader opens an account with $1,000 and decides to buy 1 standard lot of EUR/USD with a spread of 2 pips, he uses leverage of 100:1 and each pip is worth $10. The cost of the trade is $20 (the 2-pip spread), which already represents 2% of his account. This level is unsustainable and this is one of the reasons why traders who use leverage without considering risk in relation to a percentage of their capital tend to lose their capital quickly.Essay writing service