Advice on leverage amount needed

[xmsr33]

I have been demo trading with 2:1 leverage but was wondering, assuming one only trades 15 minute charts, and limits all losses to 10 pips, would a higher leverage be appropriate?

Assuming one sticks to 1% loss maximums, then 10:1 leverage would be used.

What does everyone else use for leverage when trading such short term swings?

All replies greatly appreciated. Good luck to all.

[rhodytrader]

The leverage you trade at is entirely dependent on the amount of risk you are taking in relation to your total account value.

For example, if you are risking 10 pips, want to risk 1%, and have a $10,000 account that would mean risking $100. Take that $100 and divide it by pip risk of 10 to get $10/pip worth of risk. Then figure out how large a position that is. For a pair like EUR/USD it would mean a 100,000 position. With EUR/USD at 1.30, that position value would be $130,000. That means you would apply 13:1 leverage.

Hope that makes sense.

[mdetlh]

Hey for the real trading deal, divide up your total cash into 50 lots. Limit your trades to one or 1 or 2 of those lots. I don't understand how you calculate leverage. Most accounts with forex brokers are 25:1 up to 400:1 so on 100:1 a $100 controls approximately $10000 worth of currency. Ok so you want to trade 15 minute charts, exclusively? The best way to go is with multiple time frames. I hope that this helps.

[Pipcrawler]

Originally Posted by mdetlh

Hey for the real trading deal, divide up your total cash into 50 lots. Limit your trades to one or 1 or 2 of those lots. I don't understand how you calculate leverage. Most accounts with forex brokers are 25:1 up to 400:1 so on 100:1 a $100 controls approximately $10000 worth of currency. Ok so you want to trade 15 minute charts, exclusively? The best way to go is with multiple time frames. I hope that this helps.

Hey mdetlh, may i suggest reading our lesson "Leverage the Killer" in the School of Pipsology. This will help you understand and calculate leverage. Good luck!

[mdetlh]

Ok I read the section, but it still doesn't answer the question that started the thread, and the broker's leverage is one of the issues that needs to be resolved. Oanda has 20:1 - 50:1 leverage. EFXgroup has only 100:1 leverage, with FXsol you can pick and choose leverage from 400:1 down to 50:1. These figures are ballpark, so its more or less accurate.
Whatever cash amount is used, the best advice I've seen for beginners is to divide this cash into what you need to live on and then what can be lost. With high leverage like the above, forex $$ had better be with $$ that can be lost. With this money that can be lost, divide that into 50 lots so that you have 50 chances to figure out the market and charts and make multi million $$$$$$$ with it. Then figure out what you owe the tax man after you make or break your account.