You should only apply a high leverage when you are very sure that trade will result in profit. High leverage increases your chances of margin call when you are losing, because just as it increases your pip value through higher volume, your loss is magnified as your profit. When your trade is positive, high leverage is your best friend.
Leverage should always be used wisely.
high leverage basically means youâll be able to take big positions at the same time
It is very clear who is an actual trader from the posts that try to explain what leverage is. Iâd highly recommend beginners not to listen to most of the posts on here because they are wrong.
In that case it would be very helpful if you could point out the right ones, and in doing so assist and help the beginners like myself in getting the correct answer to the question which is the whole purpose of this site and reason for joining it. To learn and get assistance to become better and successful traders. Thanks and hope to learn from you.
Yeah I like that. But to learn you actually have to read. Iâve already posted on this topic which you may not have read. Ps I had already read your post and itâs perfect. Lol I just didnt want to point out each person who is wrong. I already replied to one before.
Asking such a question requires a reading in the School that discusses leverage.
Leverage allows you to open a much larger position than you would otherwise be able to.
Itâs what makes FX trading so appealing.
For example, if you want to open a $10,000 position, you donât need to put up the full $10,000. You only need a portion, say $200 (for 50:1 leverage).
Imagine you deposit $200 and open a mini lot of GBP/USD. Every single pip move sees your unrealized P/L move up or down $1.
With this kind of leverage, a mere 200-pip move and youâd lose all your money.
Now consider how some brokers offer 500:1 leverage, which is 10x the example above.
So with $20, you can open the same $10,000 position size.
If you trade something like GBP/USD which easily moves 20 pips in an hour, youâd be out $20 in a flash.
Statistically speaking, the higher the leverage a new trader uses, the higher the probability that theyâll blow their account.
Donât forget to factor in tail risk, such as a black swan event, that unexpectedly moves the market in a massive way and your trade instantly goes against you and you donât have enough margin to sustain it.
The keyword here is USE.
You may have access to high leverage, but that doesnât mean you have to push it the max.
Itâs kind of like driving a car that can go 250 mph (~400 km/h). Just because the car can go that fast doesnât mean you should keep pushing down on that gas pedal. Especially if youâre a new driver.
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yes , you7 explained shortly but its most accurate , anyone can take big position at the same time , there is chance to bring good amount of profit , on the contrary you can also face huge losses.
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Overleverging is explained in this lesson.
Youâll see just how much profitability declines substantially as leverage increases.
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Yes, true! While I was a newbie I did blow out my $17,000 account overnight.
I was greedy to take large size trades & the market gone against me. So did I lose all my account balance. Thatâs the way the brokers want. Better not to take larger size trade unless you are sure of the signal/trend. Hope the newbies will learn something from here.
IMO, what matters is your discipline and how you manage your position/lot size and risk. I trade with a small account and use 500 lev, but I always stick to 1 micro lot and one position at any given time - Iâm in no rush to make the big bucks.
+, I only scale in if Iâm sure of the trend and I always set up a breakeven before doing so.
My point: Set your leverage to 1000 if you want to(not necessary though if you have a big account like over $1000), but MAINTAIN YOUR DISCIPLINE and always STICK TO YOUR INITIAL TRADING PLAN.
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It seems to have been said more than once that risk is always appreciated. And accordingly, the greater the risk - the greater the profit.
High Leverage =/= High Risk.
Your Risk = Your Position Size /or SL Level.
Bottom Line;
- Use the highest leverage available cause itâs leverage ($cale).
- Donât open the highest possible POSITION your account can open because itâs your enemy.
#happyTrading
Joseph!
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Yes that is true but it can magnify your losses as well.
Yes indeed, just opened a few trading accounts with different leverages and choose accordingly depend on my mood and current funds.
For the new traders high leverage is very risky to trade. The more your leverage is high, the more it is risky to perform trade.
High leverage is risky in the sense that you can lose more money but that does not mean that using a high leverage will make the market move against you. In case, you suffer a loss while using high leverage, it will be more but if you make a profit then it will also be greater than using low leverage.
I donât consider that to be entirely true. High leverage can also mean diversifying your capital and hence dividing your risk. So you wonât lose all of your money with one sweep.
High leverage means the ability to trade more and earn more profits.
This is an interesting question. I think without any risk you will not be able to earn more. Higher leverage means that you can trade more number of lots which in turn can pay you more