Clint, you are the man with the math and clarity, thank you much!
this was a great explanation , and very simple to understandI have been thinking a lot about your point recently and have come to the same conclusion as you:
Leverage doesn’t really matter.
I, like you, set my stop loss on every trade at a maximum of 1% account balance. With CFD’s, it’s the difference in value of an instrument - profit/loss that affects our accounts.
However, with no leverage, we have to put forward large sums of margin. This reduces the amount of trades we can enter and can actually price you out of some trades.
Based on the fact we use 1% as the maximum loss value, I believe a 1:100 leverage makes sense. It will bring together the two figures of profit / loss and equity / margin leading to more efficient trading.
I am very young in my trading career so take this as only an amateur perspective , but I used to think of leverage as a sort of loan service attracting risk. I now see it though as a potentially necessary tool to trading large values for small percentages of return. And the risk is managed through our money management plans.