I understand the risks of high leverage and have been using conservative levels so far. But I’m curious how more experienced traders choose their leverage settings based on their strategy (e.g., scalping vs. swing trading). Do you keep it fixed, or adjust it per trade or market condition? Any practical tips would be appreciated.
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position size is determined by where I want the stop loss to be. That should be about 1% if it goes wrong. 30:1 is more than enough
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I agree, position size is important, rather than leverage.
@Magnolia.York - A nice thing about using a small position size is that once the trade is opened and running with a vey low percentage capital risk, you can afford to add to the position as the initial risk is covered by gains, so your potential final result can be multiple times better without increasing your capital risk. This does demand a certain amount of leverage so that you can open multiple trades without breaking your broker’s limits but not to the extremes we sometimes see on Youtube clips.
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Increasing position size without Increasing risk is the key to being successful. If you can risk a small amount but make a big win when the market moves as you want it to, you’ll be on the right path.
That’s not to say it’s easy. But don’t buy into 3:1 RR stuff, you won’t get many of those, but a move of 1:1 with additional entries has a bigger reward and you make more
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I think the question was about leverage, not position-size or reward/risk ratio?
They don’t, normally.
Sensible, reasonable, non-gambling traders are limited to either 1:50 leverage in America or 1:30 in Europe or Australia, because that’s the maximum allowed for forex accounts regulated by a genuine, honest regulator.
No broker offering you more.leverage than that can, by definition, also be offering you a properly regulated account. And that makes all the other aspects irrelevant, doesn’t it?
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I haven’t heard of any experienced traders doing that.
Traders whose methods depend on very high leverage aren’t experienced and aren’t going to become experienced unless they re-educate themselves.
It’s a fairly constant and reliable factor, in trading, that leverage used and experience levels are inversely proportional. Successful professionals use least. Unprofitable amateurs in forums and Youtube marketers use most. This doesn’t depend on their trading styles.
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All I know is leverage CAN be a bonus for a pro trader & not so good for a beginner
the lower the better especially for new comers, once you have been trading a while you will know when to raise or increase it. stardard starts at 1:500 but i still think its too much.
Hi @Magnolia.York,
Asking this question is meaning you are still new in trading industry, especially CFD and future. Trading conservatively, you should be enough by using 30-100.
When you have target, for instance managing other’s fund, to reach certain target, you have to rely on leverage. Bigger leverage will allow you to open bigger volume. By this way you can reach your target faster. Example by having 1000 USD with 1:30, you will allow to open 0.3 lot (ignoring the floating). Let say you want to reach 10% / month, it will be a bit hard. If you have good proven strategy (confident and well experienced), you can ask for 1:100. That will let you open 1 lot (again, ignoring the floating).
The point is, more leverage means bigger profit or LOSS.
Most FMs use leverage to magnify their performance. Bigger the fund, we reduce the leverage to cut the risk. For official accounts, I use 1:30 to 1:200.
When I need some acrobatic moves, I use 1:500. And you know what kind of broker that will be 
Yes for serious account, it has to be deadly fixed. All should be planned from beginning.
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Do you usually plan those add-ons in advance, or decide based on how price action unfolds?
Hi @Magnolia.York,
Leverage is considered when you have matured your skill.
Talking about leverage means dealing with risk. When you talk about risk, you have to have a solid strategy with exact statistic. You are no longer trade with “uncertainty”;
For example you have good trading stat, it’s proven and you are very clear about how to use it. Next thing is, you have to optimize your profit / performance. At this point, you have to calculate leverage and margin requirement to open a position.
Leverage wont be useful for beginner, it’s important for fund manager or full time trader. When you have 1000 USD, with your trading stat, let say the profit is 3-5% / month. When you want to reach 15 - 60% / month, you can use leverage. Leverage will reduce you margin requirement to open position, so by using the same capital, you can open bigger volume to boost your performance. ( Warning: If you are not a seasoned trader, this is very very very very … very stupid thing to do )
My initial trade always has a stop-loss which would deliver a set percentage loss if hit. Many traders use a limit of 1% or 2%: I sometimes go as high as 5% but that is driven by what market I’m trading and the win rate of the strategy. Either way, it’s always decided in advance.
When following a consistent trend I will often try to add to the initial position.
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Trading is all about risking as little as possible to keep “the farm”.
The best traders however also know when to bet the whole farm.
See a majority of the traders in the Market Wizards books knew this and sometimes they went broke.
However when the stars align and you get that royal flush, the best traders know when to go all in.
So yes, varying your leverage is definitely something professionals do.
Did the professionals interviewed in the Market Wizards books have leverage available?! Surely not?!
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Many of them had access to leverage and used it.
Many of them traded futures contracts which are inherently leveraged instruments.
So, of course they had leverage available.
You mean Tom Hougaard?
How could Tom Hougaard have the success he enjoys without aggressive adding to winning trades.
These regulations prohibit a trader from betting with their own winnings - rediculous and need some intelligent revision.
Are we supposed to restrict winners to protect gambling idiots?
How do you vary your leverage when you are stuck with FCA etc restrictions?
I wasn’t thinking of Tom Hougaard. I don’t know enough about how he trades.
My FCA-regulated account certainly doesn’t prohibit that: I add to winners as often as I can.
Maybe my mistake - I’m with IG and my margin seems to stay the same no matter how much in profit I am infront. I will have to check if it’s my misunderstanding.
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