Hello. I’m wondering the advantages and disadvantages of using high leverage?
and while many brokers offer different leverage from 1: 1000 to 1:50 what is the ideal leverage for newbies
You may get varying responses to this.
Personally I wouldnt suggest using more than 1:50 as a newbie. Larger leverage may seem attractive but the likelihood of you getting margin call is only increased. The most important thing in trading is to stay in business, much better to play safe than take wild risks especially in the early days.
Have you worked thru the free school on here? It gives great explanations on this and many other subjects you will need to now about.
Pro: You can make a lot of money.
Con: You can lose a lot of money.
It’s swings & roundabouts, there’s a flip side to every coin.
In terms of starting out & learning, I’d say use lower leverage. It should keep your account alive longer & the longer it’s alive, the longer you have to learn. Once you’ve got the hang of things, you can up the leverage setting then.
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There is no ideal leverage, but as a newbie I can recommend you to get higher leverage on a small trading account and trade small volume as long as you are educating your self and developing trading strategy.
It’s fine to run a smaller account with higher leverage at the start just to get yourself in the market. As balances run high, it’s wise to tone it down a bit.
Personally I find myself using no more than ~7:1.
When the leverages in the trading accounts are lower then we do have the risks that are actually minimal and this is an opportunity for us to focus more on trading…
This maybe over simplified but I see it as the following;
Capital X Leverage = Risk
IF you want risk to remain the same then when one goes up the other needs to go down
we have pros and cons about leverage here. and some people say , do not trade with high leverage
however, if a trader have strict money management, for example only risk 0.5% per trade and only enter 1 trade only, even he use 1:10000 , it wont matter,because he is commit to risk only 0.5 % of his balance per trade
However , i agree, leverage is like a bait for trader,so he will open a big lot and risk his acc balance
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i usually use 1:50, since it’s very risky, I don’t use higher leverage
and I might be more patient to wait the market comes on the right way instead of the fear of loosing so much money.
initially, I trade high volume at small leverage, and the required margin is pretty high.
if I trade small account with hight leverage,the require margin is lower.
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Best reply
This is what I Do though I use a 1:500 leverage broker but I control my risk… It helps reduce unnecessary margin stop out but then increases loss in eractic market movements (only when without stop loss though)
Remember there’s difference between the real leverage you use and that provided by the broker, I personally use 1:10 real leverage over trade even when my broker offers 1:500. So even if your broker offers 1:1000(anyway I would never recommend a broker that offers above 1:500) does not mean you should use it all.
It Gives You an Opportunity to Trade with Low Capital and Leverage is interest Free.
As for the negative part Leverage Is a Constant Liability.
The pros are big profits, the cons are big losses, Lol…
High leverage for the unseasoned usually kills objectivity. Plans just go out the window.
Actually, I think a big leverage is what it takes to make trading profitable with small amounts of capital. But of course you need to learn how to do it right, because the risks are high enough!
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