xm.com is offering 1:888 leverage max , whats an ideal leverage to use im planning on depositing 500$ for a start? and what account to go with standard?
Thats way too much if it goes wrong way you wipe account out. IMO 1/50 but dont use it all.
ok so i opened a micro account and gonna change the leverage to 1:50
so if i buy at 1.00 what would my stake be for example of eur/usd with 1:50
Leverage does not blow your account…your risk management approach does. Leverage does impact other factors of your trade. I think a lot of people are confused about leverage.
+1 with Rambo35. Take all the leverage your broker offers. Just don’t trade with it.
If he is new I highly doubt he has his risk management in order let alone emotions that can lead to bad risk management.
ive actually been practicing last 2 months daily on a demo account ive had quite the success rate i do stick to the idea of make pips,keep pips,repeat , the only thing i need to understand is the leverage factor which ive been trying to understand if i buy in at 1.00 what does that represent how many lots?
When choosing leverage you have to be careful especially when you are a beginner because how you handle leverage matters a lot. More leverage requires more risk.
True, but it’ll get you there in a hurry if your not careful. I had a similar question and a member gave me a link to babypips’s school/preschool lots and leverage in the How to trade forex section. You’ll have to find it since I’m new and can’t post links(stupid rule). It’s also in the thread I started a few days ago.
I’m sure your aware simulation is always easier. Being in the same boat I would stick to 1:50 and reserve the right to use the snowman x 3 leverage for sometime later.
You are right , maybe we has know about bad impact of leverage cause for trader who still has poor understanding about this business they will choose highest leverage to desire can have big margin to make trade with bigest lots as possible i think
It is right that traders should know about leverage before decide to use high leverage or low leverage. And about using low or high leverage, it’s depending on your capital to trade too. If you’re using low capital then it is better to use high leverage because if you’re using high leverage then you could hold floating minus more than using low leverage.
BB and Rambo make a valid point. IMO it does not matter at all…
It is like your mortgage leverage will eventually determine the margin requirement for your trade. If I have a 0.5% margin requirement it means my leverage is 1:200 and if you have 1% yours is 1:100. All this means is if I want to buy £100,000, I need a minimum of £500 to do it and you need £1000 to do it.
If your mortgage provider asked you for a 20% deposit and asks your neighbor for 15%, you won’t be happy, seeing being able to raise the capital requirement is key determinant of you getting the mortgage. Who cares in this case seeing the perception that a owning a home is safer than FX trading even if it is debt based.
The banks operate under the same principles. A few years ago a banks attractiveness to investors was based on their ability to acquire debt and leverage it to make a profit (till the world ended). So higher the D/E ratio the better (debt to equity ratio, i.e. leverage ratio).
In FX it is the same, we want to profit from debt so take as much leverage as possible just beware that because you can burrow a million pounds on a position with a very small capital outlay, doesn’t mean you should… Risk management 101. Don’t be Lehman Brothers…