I typed a reply the other day but it never appear… weird… anyway here it is again.
Thanks for the help Clint.
I now get the idea that if Maximum Leverage is more than Actual leverage, I don’t have to worry about it.
Using the example above if my broker only offered a Maximum leverage of 2:1 (not likely but just an example) I couldn’t put on my trade because my Maximum Leverage (2:1) would be less than my Actual leverage (3:1), and if the trade went against me I would get a margin call before my stop was hit. Therefore if I had a larger maximum Leverage (100:1) than my Actual Leverage (3:1) I wouldn’t have to worry about a margin call.
So I get that now… but why then do they say leverage is the number 1 killer of newbies in forex? Is it because new people don’t limit their risk?
Also I’m not too sure what you mean by “Actual leverage used is not proportional to risk taken, contrary to what some people think.”. Could you please explain this a little more?
Thanks,
Ben