Choosing the right leverage for your needs depends on how much you can afford to risk, and what instrument you are trading.
Absolutely. Iâm also not saying you canât be successful if you risk more or less. Iâm in the camp that believes, when youâre just starting, to use a reasonable amount of risk for your level of experience. To keep from blowing your account, 1-5% has been the most commonly suggested level of risk.
More power to you if youâve risked more early on and survived.
Is it possible to trade indices with high leverage?
Possible. If youâre planning, go for S&Ps. Theyâre one of the most liquid and high-volume trading instruments.
I wish!! Iâm still sort of learning the ropes.
@Don but isnât there always a risk with the investment value changing because of the change in the level of interest?
Index futures are very liquid and do come with low transaction costs, but letâs not forget theyâre highly volatile. So until youâre a day trader whoâs familiar with the futures trading, high leverage is your thing.
so youâre suggesting that I can go from 5:1 to 50:1 right away and there wonât be any legal implications whatsoever?
Thatâs what Iâve been told. I suppose putting the stop loss, keeping the positions small, and limiting the capital for each position is a good way to start learning how to use and manage the leverage. My results have been great using these strategies with â â â â â â and xm.
There are some brokers that ask you to set default leverage when you are setting up your account. But you can change it whenever you want.
You should use higher leverage only when the results are crystal clear and on your side. You should track positions, apply stop loss and use market orders to prevent large scale losses.
Well, blowing your demo account is a great learning experience. Better to do it now than later, when the real money is on the line.