I’m wondering. If you want to reduce risk as much as possible, would you use 1:1 leverage?
No I am will not use these leverage because i have only small capital in my account so usually will more prefer to use high leverage and some broker now aleady offer high leverage although less useful but still attract many trader to trying these offer.
Your question appears to assume a correlation between leverage and risk.
Although in practice, overleverage tends to cause many problems and disasters [I]to people who haven’t yet learned that successful trading is about risk-management rather than profit-maximization[/I], that assumption - perhaps surprisingly - isn’t a valid one. Although it’s true that aspiring traders who lose money and those who have “accidents” [I]do[/I] also tend to be using far too much leverage, that’s correlative rather than causative: it’s actually because of who they are and their belief-patterns. Appearances can be deceptive.
Actually, I understand that the optimum leverage for most traders is 1:100 but FXCM stated that most of their successful traders used 1:50. I’m just curious if there is any trader who would use 1:1: leverage.
NO, you just increase your risk of a stop out and you cant really open more than a single trade at a time (and that is if you have a very large account).
When you trade @10 cents a pip with a stop of 20 pips on a 100$ account you are only risking 2$ weather its 5:1 or 500:1. The important thing to remember here is that only 2% of the account is being risked.
Over leveraging kills noob traders when they do something ludicrous like trying to trade 5$ a pip on a 100$ account because if the trade goes 20 pips against them their account is dead (even sooner when you consider that brokers will stop you out before that).
There is also more swap with higher leverage but if you would still need to hold a trade for a very long time before you even notice.
A clarification is required here. Are we talking permissible leverage (broker setting)? Or are we talking actual leverage employed (position size relative to account size)?
If you want to reduce your risk you can do it with a good risk management. leverage has nothing to do with it. If you don’t have a good trading strategy than no matter what you do, you are going to lose your money, that’s why you should trade with a small account while you are trying to develop a trading strategy and there higher leverage is recommended.
According to me minimum leverage is a lot useful than high leverage. When the leverage is high, the trader tends to take more risks and thus, end up incurring huge losses.
However, with low leverage, the risk appetite is less and thus, the trader will trade on mini or micro lots. Although I have never used 1:1 leverage, I have traded using 1:5 leverage in my trading conditions.
No. I don’t have a pile of money to do so. There is no use of such a leverage unless you have a thousand or a million to invest right away.
It’s really depend on you, as long you can manage your risk reward.
I open account using 1:100 leverage. this account just for my portfolio trading.
my actual trading was using real money since my business is export import.
and it did pretty good knowing the chart structure before i change currency for my business inquiry.
Totally agree with you!!! Start trading with cent accounts, and slowly upgrade yourself to a standard account etc… as soon as you are ready to trade in standard account, you should develop your own risk management by then.
Nothing better than using 1:1 leverage. Your risk is minimal, especially if you’re a mid-to-long-term trader.
That’s actually true. The risk is significantly lower. And large leverages are some sort of a trap, to be honest. But anyways, I can’t imagine trading 1:1 if I don’t have a pile of money.
I never ever ever.
Why even bother about what amount of leverage are you using right now? Just size up your position accordingly such that from your entry price to stop loss, your potential loss will be exactly equivalent to 2% of your total account equity. Leverage is useful only to the extent of enabling you to open up more positions.