Hi, babypips members!
I’m learning Forex now and I little beat confused with leverage. I understand that it is impossible to trade without it, but when leverage is too big it is risky.
And what is normal leverage for trading? What leverage do you use?
As high as you can get, actually.
Just don’t use it, rather this reduces the required margin per trade.
Big difference between maximum allowed leverage and leverage used.
As for your question, my ‘leverage used per trade’ is close to 1:10, while the account has a maximum allowed leverage of 1:50
High leverage is not [B][U]in itself[/U][/B] dangerous, if sensibly used, but it’s also part of a very common “syndrome” in which gullible beginners with unrealistic expectations habitually get fleeced by scammy “brokers”: counterparty market-makers who are pretending to be forex “brokers” (and have large numbers of customers who don’t really understand the difference between a market-maker and a genuine broker - many of whom post regularly both here and in other trading forums) have learned, from long and successful experience, that the type of customer [U]attracted[/U] by very high leverage is also typically one who has a gambling mentality, is seriously undercapitalised, has a delusional impression of how quickly he can become steadily profitable and to what extent, and is exactly the right fodder for a business model which depends on having a large turnover of customers who lose their money.
Well, I seem you need to select trading leverage feature according to your personal trading system and plan! Don’t use aggressive trading leverage if you don’t require in order to your trading system! Personally I am comfortable with small trading leverage feature because, I know money management is one of the most important point of success! Frankly, now I am working with 1:100 leverage and I don’t want to change this ratio, that’s all!
I think that leverage between 1:50 and 1:100 is absolutely fine. Of course it depends on the trader’s experience and strategy. High levels of leverage are dangerous for people who are new to this matter, have lack of good discipline and are greedy. When you combine these, you will most surely have a blown account :D. I agree with Lexys that most scam brokers offer very high leverage and their clients consider this as an excellent condition…well it’s not, it’s a certain trap if you don’t have the experience to handle that kind of high leverage.
Using high leverage might will leading trader being greedy and trading like as gambling, I am also trying to use low leverage like as 1:50 on account trading, although now some broker offer high leverage like as 1:1000 this is too high leverage I think
We use 1:500 leverage, but please keep in mind that leverage is something that is the least of worry, if we want to be successful and achieve anything worthy then we will have to do it through knowledge, experience and discipline, it’s impossible to succeed through high leverage or short cuts. It will only take us nowhere and make us lose, so got to be extremely careful with how we go about working.
Choice of leverage should be made according to one’s own trading style and strategy. However, I personally prefer leverage upto 100x. Leverage provides one with the privilege to trade with higher amount without making such big investment i.e. it multiplies your investment by the amount of leverage opted. Using very high leverage might be risky as chances of losses increase especially for the new traders. One must always opt for appropriate amount of leverage suitable as per his/her trading pattern.
Personally I prefer to use small leverages. 1:10, 1:50, maybe, 1:100. The higher your leverage, the higher risks are. Im a beginner, so Im afraid to risk a lot. But if you are quite professional trader, I thing, leverage up to 1:500 is ok.
AdbulFani,
It sounds like your getting confused with maximum leverage available on account and the actual leverage used on a trade.
Just because you have an account with a maximum 500:1 leverage, you can still only use 1:10 or less, or any variation up to a maximum of 500:1.
With respect to this, it makes sense for traders to accept the highest maximum leverage available as this reduces the required margin per trade. I have 50:1 maximum leverage on my account, however I never use more than 10:1 - a big difference. Just because you have the opportunity to use all 500:1, it doesn’t mean you have to.
Maximum leverage is trivial as you will always adjust your position size to your allowable risk per trade.
Many experienced traders said that safe leverage ratio is 1:100and according to me it right because these leverage ratio make us possible to trade with low lot or margin per order. So, with small deposit only , we can start trading and maybe also could cover several loss before get margin call.
Do not use high leverage and it can make traders greedy and harm their trade.Leverage should be lowest side.
Hello hasmunfx,
In my view, it depends on your risk appetite. If it can increase your profits, it also posses risk for high losses. Say if you are using 400x leverage in your account and market goes against you with sudden massive spikes, chances are high your account can suffer massive losses as with this high leverage you are taking very high risk. As for me, I keep myself restricted to 100x leverage because it lets me trade higher volume with reasonable risk.
Again - chances are you are not using 100:1 leverage - this is just the maximum allowable leverage on account.
I’m baffled by the comments in this thread…it seems no one here understands the difference of the following two points.
Maximum available leverage (used to calculate margin requirements), such as the choice to open an account with 100:1 or 200:1 or even higher.
Actual leverage used on a trade, typically far less than the maximum available leverage in point one.
There is [B]NOTHING WRONG[/B] with opening an account with the highest available leverage on offer!!
Just because you open an account with 100:1 leverage it [B]DOES NOT MEAN[/B] that each trade is using 100:1 leverage…
Blind leading the blind bro. Dont know about others but leverage is an overdiscussed thread topic because people simply dont know how to use the search button. If you cant search you certainly cant trade!
This is true - of most forums unfortunately.
Thats true, but we are talking about what leverege to use while trading. Not about what account to open. I agree, that its ok to open an account with high available leverage.
I don’t know about the majority of people here, but I’ve never seen someone calculate a trade based on what leverage they are using. Leverage used is a byproduct, calculated after you decide what % of your account to risk on any one particular trade. Once you decide this % of your account to risk on a trade you cannot change the leverage required to carry out this trade - it is what it is. So it makes no sense to work out leverage first and then go about finding a trade to fit around leverage limitations. It’s just not rational, that’s all, think about it 
By reading the answers here it’s clear that [in most cases, not all] there is a lot of confusion…
Maybee( But thank you for answering, guyes, you shed a little light on my question about leverage.