Leverage & Margin

As a newbie with ZAR347 in his account, what is the recommended leverage option?
I created a demo account first with 1:50 leverage and I was shocked after executing a buy order for 0.02 volume which cost me R3 but my margin showed an R150 in change.
So that’s a little concerning that in just 2 trades which would have cost me R6 of my own balance could have potentially emptied it.
also, how does 0.02 volumes correlate with the bid or ask price EG: EURUSD1.1443/1.1445

1 more thing, how can brokers allow for 1:888 leverage to new accounts? or would it just be denied if I try to change it to that?
Thank you for your time.

It’s a multi-faceted answer. How do you trade? What’s your trading size and average risk? What’s the minimum lot size offered by your broker? How much are you willing to risk per trade?

Generally you wouldn’t want to exceed 2% risk / trade. Most traders prefer 1% or lower. Basically lower = better. How you trade also determines how much you’re willing to risk. The longer the time frames the greater the risk and more capital required. Say you don’t have as much capital (ZAR347 = ~USD23) then maximum you can risk is @ 1% risk is 0.5 pips at a 1:50 leverage at 0.02 lots.

I don’t know if you’re capable of getting away with that little even if you scalp the 1 minute timeframes. And that’s like blitz chess. You need a lot of experience and be hard-wired for it.

Give this section a read. I think it’ll explain most of your questions and help explain why undercaptilization is the biggest reason why new traders fail:


Maybe I misunderstood the question but I think this is better directed at the broker. Changing the leverage maybe simply opening a new live account (as is the case with my broker atleast).

It’s in the best interest for brokers to offer higher leverage and market higher rewards. Higher leverage = higher margin call = higher propensity of going broke