At the time of selecting a broker, traders think of the leverage issue the most. Leverage trading is a technique that can bring high profit and high loss as well. But, according to some traders’ risk management policy; it’s prohibited to trading with high leverage. So, it plays with a traders’ sentiment. So, traders should make their decision so carefully.
You are right that leverage can be a dangerous tool if used wrongly. There are two ways of looking at the usage of high leverage:
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High leverage allows a trader to take larger positions and therefore bigger risks of a major loss. If this is not understood then a loss can be severely damaging or even fatal to a trading account
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Look at it from the other extreme. First determine what level risk is suitable for one¨’s strategy and then use high leverage to minimise the required account balance to comfortably cover the margin needs (both intitial and floating margin). This enables surplus funds to be used elsewhere.
Either way, risk and money control is the prime concern.
high leverage means high risk , this fact is not true for all time , if there is any risk that indicates there was non sense trading plan including zero risk management.
Frankly, money management is such an important parameter here; without proper plan & system, high leverage is meaningless! Trader’s don’t need to rely on high trading leverage, if they are with a good trading skill!
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sometimes money management works to fail when using high leverage , because market sometimes moves at random and never follow any kind of trend.
beginners should not trade any kind of leverage , its really a risky financial element from all.
if you want to save your risk ratio then you have to make sure most powerful money management that comes from a long time experience which is expensive much.
A lot depends on the amount of capital, the size and number of orders and of course EVERY leverage you use.
It’s all good if it’s in balance.
There is still a category of traders who hope to earn a lot and fast. It can be dangerous for them, because today you can really make a lot, but tomorrow you can lose everything. Leverage is always an opportunity as well as a risk, it is worth remembering.