Idea of leverage is so unclear, please help

Beginner Questions
1

I am a beginner and starting to learn risk and money management. However, I dont seem to understand leverage, it seems useless any time I use a position size calculator.

If A has a micro account of $100 with a leverage of 1:500. Does it translate to the fact that he can control $50000(usd as the base currency?). What does this really mean? Does this also mean he can control only 50k units before his account get blown?

Almost all article on leverage, risk, money mgt have always been incomplete. As a gift, Can someone give a good read on risk, leverage, money mgt? (I don’t want story tellers… I prefer a read with going to the flesh immediately. Save the stories for literature readers pls)

2

You can try these:

Best of luck.

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3

best way to understand and get the feel and dynamics of leverage is demo preferably 6 months or longer knowledge is good but alone wont bring success

4

Please spend more time reading the School of the Pipsology since these concepts are covered deeply.

In order to understand leverage, you have to first understand how trading with margin works.

So start here: What is Margin Trading?

Then you can move on to here: Leverage Exlained

Then here: Risk Management

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5

in demo any kind of leverage is safe , because there is no real money but in a real account its much risky in spite of having good knowledge.

6

Hi @jangga

Exposure risk and leverage are different things.

Your risk exposure is only determined by the position size. E.g. If your position size is one lot then your pip value is the same whatever your leverage is.

Your leverage only determines what percentage of the nominal value of your position size is required from your account’s balance as a kind of initial deposit. The higher the leverage ratio the lower the deposit amount is. Which, when turned around the other way, means the higher the leverage ratio the more positions you can open for the same deposit requirement.

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7

Hi,
In demo there has no real money but it can teach you more things about leverage. A new trader start first from demo account. Its risk free but vary helpful for learning many things, and increase your trading knowledge.

8

yes true but it will give you experience how precarious the use of leverage can be , though your right it s a different ball game using real cash.go demo then minimum amount till you improve, when i first started i blew about 80 per cent of my account but carried on with that 20 percent , i stabilized for months not really winning or losing, then built up again, but them months i had a low pot i learnt the most

9

no way to disagree but the knowledge we took from demo account , what you think it really works when trading in a real account ?

10

It’s not the same but helps you to provide a real trading experience.

11

I stilk trying to grasp it myself, but im getting there.

I found this somewhat helpful.

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