Hello
Lets say you want to invest 10.000 USD and leverage 100:1. If I am correct this means you control a position of 1.000.000 USD?
Would you buy/sell just 1 position with that amount of money or would you devide it? By dividing I mean you invest the same amount but in smaller parts.
Ex. Instead of 1 position with 10.000 USD leverage 100:1, you buy 10 positions (at the same time) and for each position you invest 1.000 USD and leverage 100:1. Witch means it’s the same amount invested as you would do if you buy 10.000 USD and leverage 100:1.
And then suppose there will be high volatility and big gaps etc. And at that point you close the big position (or the 10 positions) this means it would be very hard to close it at desired price, right? So wich way is more safe?
The reason I ask this is because I think the system won’t find someone for sure that wants to buy from me that big amount? Or is the big position sold to many other traders in smaller parts?
Just want to know how this works in order to decrease risks. Hope you understand what I mean.
Simple answer bro. Dont do it. Infact the use of leverage to trade is a very dangrous exercise. If your trading with SL at 200 pips you don’t need it. At 100 pips max is 2:1, 50 pips 4:1, 10 pips 20:1. Follow the pattern. What leverage allows is the trader with a smaller account to maintain several positions with out fear of getting a margin call and having trades closed out.
Dividing positions is only good for a newbie trader, by doing so he can close some part of those positions with less profit and then can practice for trade management during the process.
Dividing positions and entering them at the same time makes no sense at all and does not reduce risk. Dividing them and spreading them out over a zone is what I do, but it all comes down to your strategy. I think trading with just a single point of entry is not the best approach. Dividing them and entering them at the same price is like people who think they effectively hedge by going long and short the same currency at the same price. Just makes no sense to me.