Leverage I’m confused

This hurts my brain at times.

So if I have £10k capital and have 1:10 leverage. If I want to trade with a lot of £2 per point does it mean I will use £2000 of my capital per trade?

Have I calculated that correctly?

I am not an expert when it comes to this stuff but I think I can help you.

You have £10.000. With 1:10 leverage it means you have the buying power of £100.000.
You mention point so I assume you talking about indices. 1 lot is 100.000 units.

When you open a 1 lot position each point is worth £1. So to risk £2 per point you need 2 lots.
To open 2 lots you need the buying power of £200.000 so you would need a leverage of 1:20 and not 1:10. With your current leverage you can’t open 2 lots so you can’t risk £2.

Now let’s say you want to use £2.000 out of your £10.000 anyway. With 1:10 leverage it means you open a position of £20.000 using only £2.000 of your capital. Since 20.000 is 1/5 of 100.000 it means that your risk per point is now 1/5 or £0.2.

I hope I understood your question correctly and answered correctly too. If not please ask again and hopefully someone more knowledgeable than me in this subject can answer.

Try to be flexible at using leverage because high leverage carries large amount of risk for traders.

Thanks you have summed it up nicely

Leverage is really a confusing issue especially for those who don’t know how much leverage should be used in trading.

Leverage is a loan provided by brokers and by using leverage, traders can extend their lot size.

I am not in favor of using high leverage but you can go for moderate leverage to earn moderate profit

Hey what’s sup homie . YouTube will also help you this , I saw some videos about leverage yesterday :muscle:t4:.

leverage is really a risky financial tool in Forex trading , you can consider leverage as a loan which provided by the brokers . beginners should not use this tool at the first stage of trading .

high leverage always high risk ? do you believe this logic at all ? expert opinion willing to know