Leverage Confusion

Beginner Questions
1

Hello,

Everywhere I read that using high leverage is bad… I am just a little confused.

Lets say that I have $500 in my account, my risk is always 2% (or $10 on this trade)

I see a trade set up and to give my trade a chance at working out I need a 40pip stop, so I adjust my lot sizes so that it works out to $0.25 a pip.

With managing lot sizes to get to the proper pip value for my risk, I don’t understand how using high leverage is bad.

Can some one try to explain it to me as I must not be understanding it correctly…

Chris

2

You’re on the right track. Ignore the leverage stuff. It’s only important in as much as it caps how large you can trade.