Leverage lessons

Hello All. This Leverage area is driving me crazy, is it possible to trade without using leverage?

Absolutely! Find a broker that allows you to select the leverage, or if the broker (demo or real) only allows a minimum amount of leverage, adjust your position sizing DOWN, and you’re basically trading with 0 leverage.

Great calculator on this website:

But maybe you’re misunderstanding the benefits of leverage? Have a read.

I think you’re getting confused with the leverage that you are offered to open a position versus effective leverage that you use based on the cash in your account.

If you have $1,000 in your account, and you open a 1,000 unit position size of EUR/USD, effectively, you are not using any leverage. You opened a position size of $1,000 with a…$1,000 in your account.

Keep in mind that you are still opening this trade on margin, so if the margin requirement is 2% or 50:1 leverage, then $20 will be held as the initial margin.

Also, if you hold the position overnight, you will be charged a financing fee based on the notional value of your position. Why? Because your forex trading provider has basically opened an overnight credit line for you to keep the position open (even though you had the cash and didn’t need it).

Yes, you can trade without leverage until you get a hang of it. However, using a leverage will give you some edge over your profits.

Leverage is the use of borrowed funds to increase one’s trading position beyond what would be available from their cash balance alone. Forex traders often use leverage to profit from relatively small price changes in currency pairs.