Hello again.
Let me ask my question clearly, how do you use leverage in Forex trading?
I know that is a basic question but I think I do not have enough information to use that correctly!
What leverage do you use and how does it help you? How do you avoid the negative aspect of " this double edge sword"?
And just please, share your own experiences, not the googled ones!
Leverage is used automatically, all you have to do is to set the value (ratio) for your account. It is used to enable you to make money. If you have $1000 with no leverage, you buy $1000 of EUR/USD and it goes up by 1% you end up making $10 on the whole deal which is not much money considering what you risked. With leverage of 10:1 you can buy $10,000 of EUR/USD which would then give you a profit of $100. Think of it as a magnifier for your money. Also, as you mentioned, there is a downside which is it also magnifies the losses. In my above example you would also lose the $10 or $100 if the trade went against you. Only use the leverage you feel comfortable with. You are balancing the potential of wiping out your whole account in one trade vs the potential of making more money per trade. It is a balancing act.
The education section of this website has a set of lessons on leverage and how it affects your account.
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If youâre using correct risk management and letâs say your only risking a small percentage like 1% of your balance leverage is pretty pointless. My accounts are set to 5:1 leverage. You donât really need much more than that unless youâve got a shed load of cash in your account.
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I use leverage every day. I for example have currently an account balance of ~2.500 âŹ. I risk 25 ⏠each trade, trading the DAX and US30 on the 5 minute chart. To open my positions i normally would have to pay ~18.000 ⏠but with leverage of 30:1 i only have to have a margin requirement of ~600 âŹ.
Without leverage i couldânt trade like i do. I would have to deposit much more money, which would be highly at risk if i would still be a beginner trader fighting with overtrading and other things like disrespecting stop losses.
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I donât use leverage.itll only kill me
Leverage just means risk is higher. If you use small leverage it wonât make to much difference. I use 5:1 which is more than enough.
I have 1:100 leverage but I donât use it in 100%. How to avoid negative aspect of leverage? Donât overtrading and keep on eye money management. Leverage is only a tool in trading which help us, retail traders, take transactions.
Hi @Pauley1 , unfortunately you are understand leverage in bad way. Generally, the leverage allows you to open bigger transactions than you have funds on account but pip value stay the same, only margin requirements to open transaction is lower. Regards Greg
I meant if your risking a percentage of your balance to the stop loss. The leverage should make no difference.
If you have a $100k account and your risk to stop loss was 1% ($1000) it wouldnât matter what the leverage is as you opening trade size would compensate for your risk margin.
So if you opened the exact same trade with the 1% risk on a 10:1 leveraged and a 5:1 leveraged account. The open on the 10:1 account would be half the size of the 5:1 account, so overall your risking the same amount of your balance and the trade would have a identical risk to reward. The only difference is your position size.
i love the leverage and it is a really usefull thing
but it can also broke you too so have a good risk management system
i use it sometimes 1:300 in the trades that i am sure about that trade but it can eat all of your money if you do not be careful
i think you have to control your leverage when you want to trade greedfully and do not use the really high leverages
So do you think 1:30 is high leverage? I mean when there are more leverages with regulated brokers around, why shouldnât we try them?
so, you say that you might use higher leverages when you become a pro?
No i dont think that is high leverage. You can use leverage as high as you like. As long as you have proper risk management leverage isnât a problem. But 1:30 is the highest leverage allowed in the EU i think? I am not sure at the moment i have to look it up. Personally I dont need higher leverage. 1:30 is ok for me.
itâs the highest allowed under EU law by brokers who are EU-regulated
thereâs nothing to stop EU residents (who are brave or foolhardy enough to do so) from opening accounts in obscure island nations where the âregulatorsâ are paid for by the brokers they regulate, and never rule against them, and they can get huge leverage, that way - it will be fine ⌠until they try to withdraw profits, but âbrokersâ offering really huge leverage donât normally have any long-term profitable customers anyway, so that technicality probably makes no real difference 
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Yep, if the broker isnât in the EU they can offer whatever is the limit in their country.
All my accounts are with RoboForex which are in Singapore. They give leverage up to 1:2000 which is crazy sums. Only a gambler would use such high leverage. I have various accounts with them from 1:1 up to 1:500. But Iâm currently practicing on demo accounts with 1:5 which seems to be more than enough. All my trades are based on risk % to stop loss, so the leverage actually makes no difference.
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All you need to remember when using leverage is to not invest more than you can afford, to be aware of the risks, and to implement appropriate risk management measures if you still want to utilize leverage.
Hello, dear Fran!
Did you finish your break?
Risk management is your answer.
I can trade with a leverage of 1:hundreds! But I will never do that; I am just trading based on my risk management and strategy.
Remember that it is optional; you can even avoid using it! So if you think you are misusing that, set it to 1:1 for a while.
Best Luck/
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I also try to use narrow leverage so I can stay on the safe side. I got two of my balances crashed just for committing that mistake.
Best thing to do is only risk a percentage of your account balance against your stop loss. That way leverage becomes irrelevant.
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The way I use leverage really depends on the situation. Itâs like this, leverage can boost your profits, but it can also ramp up your losses. So yes, itâs a double-edged sword, exactly like you said. But hereâs the thing: leverage is super handy for people who donât want to or canât put down a lot of money.
In the professional trading world, leverage gives you what is called âcapital efficiencyâ. It means that you can spread your money across different trades. Letâs say youâve got $1000 and you buy that much of EURUSD. Then, boom, a great signal on NZDUSD pops up. But hold on, all your money is in EURUSD, so you canât open a new position, right? Well, thatâs where leverage comes into play. It lets you spread your money over different positions, each being worth as much as your real cash.
But thereâs a catch. Youâve got to make sure not to overtrade. And you know what else? Market fluctuations. Not many people give it much thought, but with high leverage, even a tiny shift in the market can hit your trades hard. Before you know it, you could get a margin call out of nowhere. So, understanding how leverage works in all its glory and pitfalls is key to playing the trading game smart and safe.
@Pauley1 @ProfesorPips @flamingoproxy @ponponwei @ria_rose Is there anything about leverage that I didnât mention guys? 
@NatureGirl It would be great for you if you could give it some time and read it.
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yaaaaaay i never heard about the relation between market instability and leverage. that was awesome.
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