Question on leverage

During all the reading and movie watching I have done on forex trading.
And I have done a lot.
There is still something that is unclear to me.
I understand leverage and the fact that it is a double edged sword.
However there is conflicting opinions as to whether and what amount of leverage should be used while practicing trading… Some tutorials say beginners should not use leverage over 1:2 while different opinions say that leverage of 1:100 or 1:200 is fine.
What are your opinions on this issue.

Leverage does not matter if you use proper MM and SL. Here are my leverage which i use on my different accounts:


Those are maximum offered by the brokers i trade with. I was never cut by the double edged sword because i calculate my losses and so never got MC in my 2+ years of trading life.

Leverage really does not matter in trading. Just take it as a positive opportunity and don’t abuse the leverage offered by brokers.

The problem is that beginners don;t really understand how much it is possible to lose using leverage and they do not understand the proper psychology of accepting losses so they move stops, average in, increase trade sizes etc.
Nothing wrong with leverage but it’s best used by someoine with experience.

Leverage in practice is just the upper limit of how much you can stake on each trade, I just concern myself with how much I’m staking per pip and what my SL is.

You trade 1: 1000??

Jeez…I thought 1:400 was pushing it.

I am still stuck with 1:200

It really does not matter how much leverage you use when you are keeping risk in your mind. When i started my journey, i followed babypips advice and used 1:100 at maximum. At that time i must say 1:100 leverage was too high for me. I traded 1 lot with just $300 balance and ended up in loss. But that was my lesson and put more emphasis on MM.

Now it is not a problem for me at all. :smiley:

1 Lot usually requires at least a margin requirement of $1000,irrespective of the leverage ratio used, to even consider making a lodgement. How did you manage to do this then?

Something is being confused here. The leverage you use is not the same thing as what your broker allows. Statistically speaking, trading over 4:1 (and even that is high) is detrimental. For the people who are going to jump on saying “I use 100:1 and I’m fine”, this is not my opinion, it is from other people’s research.

Leverage, money management, stop losses etc.- it’s all related and is part of your overall risk management.

No, that’s exactly what it is, it determines the max amount you can put on a trade per PIP effectively.


I’m not to sure what your trying to insinuate yourself there. I’m glad you advise that 1:4 leverage is detrimental, however, its not really that much of an issue when using a good foundation of money engagement skills, as you quite rightly said.
Leverage is down to personal preference, both retail and institutional clients have to make this decision.

Having spoke about leverage in a separate thread, the institutional benchmark concerning leverage is bouncing between 1:28 and 1:30. So 1:4 is really a drop in the ocean compared to what the norm is quoted.

After taking into consideration my money management, my leverage is calculated at roughly 1:25, it works, and im comfortable with the risk that im exposing myself to.

Leverage, at the end of the day, is simply the top end ‘Notional Value’ that you are exposed to once the trade has been executed.

A very worrying reply from somebody with over 1500 posts. The leverage you actually use is not the same as what is offered by the brokers. What is offered by the brokers is the limit which you can go up to, you by no means need to go that high yourself- I think you’ll find most people don’t either.

The institutional benchmark? What % roughly make money in this racket again?

I don’t want to get into an argument here. As previously said, this was not my opinion, simply what I have read and heard from others research and I personally find it very believable. It makes no difference to me what others use, it wouldn’t affect what I adopt as a trading strategy myself.

That’s fine wildchancer, I don’t expect you to change the way you trade on remarks made by other peoples views. That would be stupid :slight_smile:

As to the benchmark figure quoted, I’ve been lucky enough to work at an Institutional Investment Bank during a summer break from university. Obviously, working in this area you start to pick up a few of the figures, although it would be corporate suicide to let one employee know to much information!

Yes, exactly, we are agreeing, it’s the limit, the leverage doesn’t change depending on how much you stake, it’s the amount of that leverage you use that changes.