I have read the articles in School and I am getting schooled in Forex but also have read several other books because I think you can learn from other writers perspective. One thing is always on my mind and I am asking here.
Per the article in School-Risk Management it says “try to limit your risk to 2% per trade”. And it goes on to list in a table for $20,000 the 2% risk is $400. My question concerns the $20,000. Is this the direct amount of my cash value (deposit) in my account? Or is this $20,000 with leverage?
For example if I deposited $2,000 in my account with a 50:1 leverage I would have $100,000 in my account. Obviously 2% of $100,000 is going to be a risk to my account of $2,000.
The table listed is showing a list starting at $20,000 but apparently this is NOT leverage because it states a 2% risk per trade comes to $400. How come is the table not mentioning anything with leverage since that is why the majority of traders turn to Forex in the first place…leverage.
To: Jason Rogers - I picked this thread under FXCM because that is where I am going to try my demo account and you see to be active in working with us fellow traders so this is pretty helpful.