Leverage and margin

How exactly leverage and margin are related? And what leverage is suitable for beginners?

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I would take a look at this section of the course:

In terms of what is suitable it comes down to your risk management skill.

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When you understand how leverage can help or kill you, you will know what amount to use. Keep studying and make sure you understand it. Use a demo account always at this stage

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This lesson will also help:

The Relationship Between Margin and Leverage

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leverage is an important financial which an investor should consider when choosing a broker , generally it contains huge risk so first of all we need to make sure real money management , otherwise it could be dangerous.

what you think guys high leverage always contains high risk when trading in practical ? its a really big dispute among traders.

high leverage never contains high risk , if there is any risk there was no exact trading plan with zero risk management. so be experienced and bring profit by high leverage.

Thank you for this link, I will get back here again after studying this material.

Also is it safe to use higher leverage in the beginning?

Yes I know there is always a risk in trading, but for newbie is it safe to trade with high leverage as I don’t have experience so far?

Not at all. Why would you do that. Higher leverage as a beginner will blow up your account. Don’t use a leverage higher than 30X. Many regulators restrict their clients to 30X for this very reason.

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Okay thank you for your suggestion. I have started trading with 30X leverage. And can we increase the leverage in future??

Higher the leverage, lower is the margin required and lower the leverage, higher will the margin required. This connection doesn’t simply means that higher leverage is always recommended as if the leverage is high and the margin is low then there is a higher chance of stopping out of the trade or triggering of the stop loss. So one must make the decision of choosing the leverage size rationally.

Thank you for explaining in simple words for now I am trading with 30X leverage and going good.

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Of course, you can go for a higher leverage once you gain experience in the market. You should be confident enough to come up with a strategy that goes with a higher leverage.

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You are welcome :slight_smile:

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The confusion is real because both of them are related to borrowing. In forex, leverage is related to the margin rate that tells a trader what percentage of the total trade value is required to enter the trade. For instance, If the forex margin is 3.3%, the leverage available from the broker would be 30:1.

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Yes, these are interconnected. You can use margin to create leverage. Talking about suitable leverage for beginners, I don’t think they should use leverage.