Can anyone tell me what true leverage is and the benefits of true leverage
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I’m not sure what you mean by true leverage. But my understanding of forex leverage is:
For every dollar you put up, your broker will loan you fifty (1:50).
But if you increase your leverage to 1:100, instead of being allowed to lose $50 on a trade, you’re allowed to lose $100, thereby blowing your account twice as fast.
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Leverage is a double-edged sword, as suggested above, but its also the thing that makes short-term trading worth the risk. There is no point trading short-term with no leverage. BUT the risk is you end up with no money in your account.
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leverage, in simple terms, is the maximum borrowing ratio allowed to a trader. Suppose a trader uses a leverage of 200:1, still this level of leverage is not his true leverage always. True leverage is basically the value of your leverage position during open trading hours at a particular time. True leverage never stays stable, it keeps fluctuating from time to time.
true leverage can be calculated by dividing the total value of all the open trades by the account equity.
Very often this is 1:200, but everything depends on your broket
If you base your risk management on leverage you can find true leverage by calculating the quote of the instrument and then referring to your equity base denomination currency.
Brilliant.
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Normally they have 1:30 1:50 1:100 1:200 1:300 1:500
but for USA and UK are limited below 1:50
In forex trading you can’t predict what results you’ll get, there’s a cahnce that you either run at a loss or make profit. Now, that’s where risk management plays a role. Every traders’ joy is to earn huge profit that makes them want to invest massively in trading. To earn more profit as a trader, you should have the balls to face the risks. As a beginner, my best advice to you is to take the precautions that will prevent you from arriving at a loss. Try not to go above your leverage. It is best to put in an amount that is dispensable and study how the market works. Keep in mind that everything depends on changes in exchange rate, so don’t be too quick to put all you have at once. Doing this should help you learn more about leveraging
I believe I am late to this but there is no true leverage, there are some brokers offering more and some offering less. The best is 1:100 but of course, that is just my preference. You just don’t know what the result will be. It is always good idea to start it off with low leverage if you are a newbie and then gradually increase once you are becoming more aware. Even the experienced traders won’t go for 1:500 unless the market is predictable, which in this case, is not.