Specify the leverage to use per trade?

Beginner Questions
1

Folks,

I have sent the question to Oanda, but thought I pose it here as well in case anyone here could clue me in.

I have an Oanda demo account - and I imagine I’ll get a real account with them soon.

I would like to be able to specify how much leverage to use on a per trade basis. In this way I can ensure that I’m only using the leverage I NEED vs. what I have available.

However I don’t see anywhere in the trade screens where I can specify how much of the transaction I want to use my own capital for. It seems to always assume that I want to put up the minimum required.

How can I, when placing a trade, choose to put up more of my own capital in order to use less leverage?

2

Easy.

Your lot size.

You have total control on Oanda.

If you want 1:1 leverage, and you have $100.00 in the account, you open a trade with 100 units.

Depending on the pair, that nets you about a penny a pip, or a nano lot, and using roughly $2.00 in margin.

10:1 leverage would be 1,000 units, and you would be trading 10 cent pips, and using roughly $20.00 in margin.

You’re actually using 50:1 leverage in both instances, but you are negating that issue by downsizing your lots.

It’s the safest way to take risk down a notch or two in my humble opinion.

3

Thanks !

Question though…

I got a response from Oanda and they said:

Unfortunately, it is not possible to adjust your leverage on a per-trade basis in the fxTrade platform. For simplicity, the fxTrade platform always uses the highest available leverage based on your settings and the market you are trading.

…

Since you cannot set your leverage trade-by-trade, one option you might wish to consider would be to open several different sub-accounts, each with a different leverage.

…

Doesn’t that mean if I had $100 bucks in my account, was setup with a 10:1 leverage account, and placed an order for 100 units - that they’d charge me 10 bucks and front the rest?

Also… (assuming I’m wrong in the above)

If I’m basing my position size on desired risk are you saying I’d have to make multiple orders to maintain that?

If I have 5k in my account, need a 35pip stop loss, and want to risk 2% - I need to trade 28571 units. Would I need to make several trades of different amounts just to ensure I use the minimum leverage possible?

I’m in a hotel lobby at the moment so I’ll put some more brain power against it when I’m home, but I’m not wrapping my head around it yet.

4

I would just let them set you at the highest leverage, which for Oanda is 50:1.

You can vary you leverage as you see fit.

Doesn’t that mean if I had $100 bucks in my account, was setup with a 10:1 leverage account, and placed an order for 100 units - that they’d charge me 10 bucks and front the rest?

They don’t charge you anything but the spread.

But yes, $10 would be tied up to open a nano lot trade, which would remain in your account, and be freed up when the trade closed.

I think I would rather use the 50:1, and only use $2.

But that’s just me;)

5

Well I suppose (as long as I trade the correct position size, and use the correct stop loss) my actual risk exposure is the same whether I’m 1:10 or 1:50 leveraged.

As long as one follows strict money mangement around postion size and stop loss… is there any other issues I should consider with using more leverage than not?

6

Don’t bother thinking about leverage, just accept it’s there, all you need concern yourself with is the amount you stake per PIP, in effect leverage is just the maximum you can put on.