High leverage , high risk?

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

I posted this topic some time ago during my first time through the Babypips school and got some useful responses.

high leverage always never contains high risk if there is good money management including exact trading plan , otherwise high leverage could be dangerous.

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not as interesting as the same answers thou :smiley:

High leverage can be risky, and the loss could be significant as well. But if you have the capital amount to balance the losses, then you can go for higher leverage.

You should choose the level of leverage that makes them most comfortable. If you don’t like taking many risks, or if you’re still learning how to trade, a lower level of leverage upto 30:1 might be more appropriate. Higher leverage will magnify your profits and losses by the same degree. With higher leverage you will have large profits, at the same time you can have big losses too.

Higher leverage does seem like the risk is higher but accordingly, the greater the risk and leverage, the greater the profit is received.

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I don’t understand why new traders feel like using high leverage when they have no idea about what they are doing. They must not forget that leverage is a double-edged sword that comes with equal numbers of chances of making profits and losses both.

yes high leverage is high risk and vice varsa…it also gives you high profit in return.

I believe that you need to know what you’re doing when using leverage. Though my brokers- pepperstone and fxview offer high leverage, I have never used more than 30x leverage fearing the losses. I have used leverage quite well and found no reason to use it unnecessarily.

I agree that high leverage is a great way of magnifying your profits. But what if you lose? Do you have any backup plans for that?

Trading forex using leverage makes it easy for the traders to make good profits without having to risk their money. But if they lose, it is their money that they lose and not their broker’s.

True, High leverage might look like a lucrative option for many new traders. But it is not what it looks like. You must always borrow and risk what you can afford to lose. By risking more, you will have to pay your broker more if you lose.

High Leverage only means 1 thing, your margin requirement to initiate a trade is less. Thus, you are able to trade with a smaller equity account.

Regardless whether your leverage is high or low, for a trader who always utilize at least 50% of his available margin and leaving 50% account equity for drawdown, that trader will always have higher risk of losing all his money when compare to a trader who never utilize more than 5% of his available margin.

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I like what you said Emily but one must know how to manage the risk before he or she takes risk on something! If one does not have the ability then low leverage is a good option for them I would say.

High leverage is helpful to me with my smaller accounts. Its how you use it really

High leverage is only dangerous if you have no form of risk management in place or strategy. Which begs the questions why are you even trading live in the first place regardless of leverage. It’s a bit like guns don’t kill people, people kill people. Same with leverage and accounts.

I agree with you that the risk is well paid but in the beginning it is always better to select a leverage not more than 200x

Risk management is very important. You should know how much you are willing to risk and accordingly set the leverage of your account

Honestly, I do not think of it as that way, if I have more leverage, it gives me a chance to place bigger trades as well. Eventually, I can use it make more profits. So, for me, the risk factor is not much involved in it.