Hello Everyone,
I just opened a live account and it has a maximum leverage of 500:1, it also has an option to change this leverage. However, I only plan on trading a maximum lot of 2000 for every $1000 in my account. Does it make any difference if I don’t change the high leverage on the account, say to something like 200:1?
The way I understand it leverage only makes a difference if you trade the full amount that the leverage allows. The difference between 500:1 or 200:1 is that on $2000 lot for every $1000 in your account is at 500:1 your margin used is $4 at 200:1 it is $10. What matters is how much you risk compared to your account (according to your risk management).
That is my understanding of leverage anyway.
Cheers
There’s a difference between permissible leverage and employed leverage. The former is what your broker allows, the latter is what you actually use. If you plan on employing less leverage than your broker’s max, then where it’s set makes no difference - unless there’s some kind of difference in service or whatever that your broker attaches to different leverage settings.
Thanks for the replies. I just wanted to make sure I wasn’t doing anything ‘uber silly’. My broker doesn’t have any difference in service attached to leverages…at least not that I’ve noticed.
One of the disadvantages of Forex considers of Forex trading is concerning the Leverage. You need to be very accurate with the execution of your trading signals and very careful with your stop loss defense. When trading on leverage if you are not watchful, a quick equity spike will wipe your position.
Happy Trading:)