I haven’t heard of experience traders change their leverage from time to time depending on their strategy. As I understand of leverage, If you have enough capital, you can do with very minimal leverage or none at all. But if you have limited capital then having to use a high leverage possible can be to your advantage. Though the amount of risk stays the same.
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No, I’ve never heard of that, either.
Not many very experienced traders will be trading CFDs, so most of them won’t even have the faciitiy to “vary their leverage” and wouldn’t need or want to anyway. The original question’s based on a misunderstanding, really?
The brokers offers leverage of up to 1:1000 on micro and 1:400 on the regular accounts. Some brokers also claim 1:2000 and few crazy offers like 1:3000 as well in the market which sounds pretty unrealistic to me. The beginners being unaware of the market conditions should adjust to lower leverage in start because high leverage can lead to higher damages and wiping out early.
100% true. If you’ve got the capital, you don’t need much. But with a small account, high leverage helps, as long as you manage risk properly.
first time trading with hfm it was 1:500, and yes it was too much for such a small account, and yes i did blow up a few. haha
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If you know what you are doing, you would want as much leverage as you can get even if you are naturally not going to use it all on a single trade for example. The reason is simple.
Institutions may have $100m credit line (leverage) for having $10m for example in an account, depending who your account is with, you could have more. I am sure most people have seen the movie Dumb Money (best example), the Ken Griffin son in law fella had a massive short for the size of fund he had, this would not be possible without high leverage and he was trading stocks which has much lower leverage. Also bare in mind that the same institutions have access to CFDs like everyone else and are not governed by retail trading MiifID type rules on leverage. I remember the days when you had 1:1000 (I am showing my age now).
Anyway, more leverage means more efficient use of capital. If I have $100,000 account with a 1:100 leverage then my buying power is $10,000,000, that’s serious risk to any counterparty trading against me irrespective of historical performance or experience.
Also, there are lots of reputable brokers in New Zealand for example that offer the 1:250 and 500 leverages and they are all regulated. Most reputable brokers have offshore arms that can offer retail high leverage. Also eligible counterparties (250k+ in assets) can waiver their rights to being consider retail and can raise their leverage. Also I am aware US citizens are very restricted relative to EU even UK citizens, so taking this into account most retail just don’t have access to high leverage. I am not in that boat so I cannot relate I have high leverage (1:500) and I don’t even think about it.
If I say I am risking 1k today on a trade, it’s because I have the capital to accommodate that trade equally I don’t need to have excessive funds locked up just to be in the trade, I have capital freed up to do other things. Hope this makes sense.