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Low leverage is dangerous, why?
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togr

Member Since Feb 22, 2011  3822 posts vontogr (togr) Dec 09 2016 at 10:06
The point is simple. If your goal is to make lets say $1000/month you would need just 10,000 deposit with high leverage to achieve this but you would need 100,000 with low leverage to achieve the same profit. So in fact with low leverage you risk 10x more to acquire the same profit. Think about it.

I like what I trade, I trade what I like
TiffanyK

Member Since Feb 12, 2016  390 posts Tiffany (TiffanyK) Dec 09 2016 at 13:58
Agree. With lowering the leverage the risk becomes higher and vice versa. Of course every traders goal should be to avoid the big risk of losing, not to concentrate only to the profit at the end. Sometimes the movement can go opposite of your plans and the bigger risk will mean no more funds available.

Accept the loss as experience
clessm

Member Since Jun 07, 2016  31 posts ReidHershel (clessm) Dec 09 2016 at 14:12
sorry for delay answer.
..as I say if u usd no leverage , u not need to SL or Cut loss.
..
..
like U go to Internation bank and Exchance Usd , like this = this is meanig of no leverage.
..
..
when graph move 1 % your balance will 1 % too.
..
U say brexit has move about 2000 pip ? yes 2000 pip just about 20 % .of over all value
..
no leverage stretegies was used in many Hedge fund. and that is a secret of passive income in FOREX.
..
u can create the system that use no Lv ( not need to SL) to create cash flow , and then usd cash flow to bet leverage product
..
If u use no Lv stretegies // if u open 0.01 lot Std u usd full margin at 1000 contract size // such as buy GU at 1.26000 // u must have money in your port about 1260 usd for 0.01 lot std // 1 order
..
the weak point of no Lv stretegies was shown in sitiatuion that u can not open other trade when u still have Loss position //

if we know risk,we will not ruin // Novice Trader :
clessm

Member Since Jun 07, 2016  31 posts ReidHershel (clessm) Dec 09 2016 at 19:14

And !!
.. when u usd leverage such as 1:10
.. it mean when the graph move 1 % your port was move by 10%
..
like this........if your balance was 1000 usd ....and u known...0.1 lot std was 10 000 contract size....
..
if u have 1000 usd in your port // and open 0.1 lot std . // it mean u have 1000 us but play size about 10 000
..
then if u balance still the same and u open 1.0 slot std // it mean u have 1000 us but plat size about 100 000 (leverage about 1: 100) what happen after we known this fact?......
..
u play 100 000 but 1000 is your balance 99 000 is fake balance that broker give to u for open it, not your real balance
..
.. if u loss more than 1000 from 100 000 u will stop out (1 % of overall value)...
..
u call low leverage was dengerous? still ?

if we know risk,we will not ruin // Novice Trader :
Dove_Services

Member Since May 17, 2013  33 posts Dove_Services Dec 09 2016 at 21:50
The idea that lower leverage increases risk is intuitively wrong and defies basic financial logic. I am amazed by the conflation in logic used to make such an argument. Leverage is simply a form of financing mechanism. Leverage vs no leverage is just financing structure between the use of debt vs no debt. Your capital (equity) put to risk is still the same regardless on the level of leverage. What changes is the trigger mechanism to stop out your position. In the real world, if you borrow to invest and you looses it entirely the lender will go after you. In the forex market, your broker cuts your position before the leverage crystallise into a real debt. What doesn't change is that the capital employed to earn the return remains the same regardless of leverage. In other words, the risk to your capital is the same regardless of leverage except that the broker automatically cut your position before it becomes a debt issue.

A good example is the USDCHF debacle where some clients ended up in negative equity. Fortunately for some there was a get out of jail cut because of the way the terms were structured and the fail safe mechanism of the brokers did not work as planned. I would not bet on it that in a future black swan event, the same get out of jail card will be available.

rob559

Member Since Feb 11, 2011  1916 posts rob559 Dec 11 2016 at 07:26
togr posted:
The point is simple. If your goal is to make lets say $1000/month you would need just 10,000 deposit with high leverage to achieve this but you would need 100,000 with low leverage to achieve the same profit. So in fact with low leverage you risk 10x more to acquire the same profit. Think about it.


i like simple answers

one day at a time
terrate

Member Since Oct 17, 2016  8 posts terrate Dec 11 2016 at 07:32
Just use a example, you will use low leverage when JPY but no use on CHF ...

low leverage means low entry , i don't know why dangerous.

If u says your low leverage is win trade and high leverage is loss trade then can make sense.

low leverage provide you more ways, you also can fixed your leverage x100 or x50 everytime .




Enjoy your Profit and Loss
togr

Member Since Feb 22, 2011  3822 posts vontogr (togr) Dec 11 2016 at 07:43
clessm posted:

And !!
.. when u usd leverage such as 1:10
.. it mean when the graph move 1 % your port was move by 10%
..
like this........if your balance was 1000 usd ....and u known...0.1 lot std was 10 000 contract size....
..
if u have 1000 usd in your port // and open 0.1 lot std . // it mean u have 1000 us but play size about 10 000
..
then if u balance still the same and u open 1.0 slot std // it mean u have 1000 us but plat size about 100 000 (leverage about 1: 100) what happen after we known this fact?......
..
u play 100 000 but 1000 is your balance 99 000 is fake balance that broker give to u for open it, not your real balance
..
.. if u loss more than 1000 from 100 000 u will stop out (1 % of overall value)...
..
u call low leverage was dengerous? still ?


that is pure nonsense

...your so called graph move has nothing to do with reality...
learn what does leverage mean
what does pip size mean
what does sl mean

I like what I trade, I trade what I like
HarriOshord

Member Since Dec 08, 2016  19 posts HarriOshord Dec 12 2016 at 13:49
The higher above the shoulder, you lose in case of failure and more win if successful. Are you sure that nothing, not forgotten in his equation?

McLeonis

Member Since May 16, 2014  13 posts McLeonis (McLeonis) Dec 13 2016 at 06:19 (edited Dec 13 2016 at 06:25 )
In this case, actually leverage not so important as people think.
It's just a margin requirements to open a position, some broker can provide a leverage from 1:2000 to 1:UNLIMITED (EXNESS).

Broker will return it when you closed order but YOU WILL TAKE ALL PROFIT AND LOSS from the position.

Low leverage mean you need more funds to open a position, you will bear the cost of opportunity.
Example:
You have a $100000 account,
1 lot at 1:5 leverage, you need $20000 to open a position and not greater than 5 orders
1 lot at 1:500 leverage, you need $200 to open a position and not greater than 500 orders
With high leverage you can make more trade than low leverage.

If you have a solid management plan, you will know how much risk per trade and there is no need to mind about leverage.
I personally care about leverage when i need to calculate swaps rate.

Hope this significant.

I don't throw darts at a board – I bet on sure things.
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HIGH RISK WARNING: Foreign exchange trading carries a high level of risk that may not be suitable for all investors. Leverage creates additional risk and loss exposure. Before you decide to trade foreign exchange, carefully consider your investment objectives, experience level, and risk tolerance. You could lose some or all of your initial investment; do not invest money that you cannot afford to lose. Educate yourself on the risks associated with foreign exchange trading, and seek advice from an independent financial or tax advisor if you have any questions. Any data and information is provided 'as is' solely for informational purposes, and is not intended for trading purposes or advice.