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Low leverage is dangerous, why?
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Adelgrepling

Member Since Nov 04, 2017  13 posts Adel Grepling (Adelgrepling) Dec 17 2017 at 08:22
togr posted:
JacoAF posted:
Interesting... However, any form of leveraging can be dangerous if you have no clue how to apply proper risk management on your portfolio. High leverage (e.g. more than 200) is very dangerous to NEW traders, who tend to place more trades (because each trade requires less margin). New traders also are less disciplined in using correct stop-loss and take-profit levels, which could result in holding onto multiple high-leveraged losing trades for too long, resulting in blown accounts very quickly.

I think you have a valid point if you are an experienced trader with a solid proven trading system. It makes sense to use high-leveraged accounts when a proven risk management strategy is applied.

But I would not advise any new trader to open a high leverage account (e.g. 1:500) on their first attempt at trading, while they are still very inexperienced in terms of risk and money management, solid technical and fundamental analysis as well as being able to handle the emotional stress associated with trading, especially manual trading.

Anyway, very interesting post indeed! smiley


Well even newbie trader could work with high leverage using fixed stop losses and lets say max XXX trades od size of YYY on account of ZZZ balance. Well ANY even newbie trader should have trading plan including position sizing based on leverage:)



Do you recommend me to work with high leverage?

togr

Member Since Feb 22, 2011  3819 posts vontogr (togr) May 14 at 13:43
Adelgrepling posted:
togr posted:
JacoAF posted:
Interesting... However, any form of leveraging can be dangerous if you have no clue how to apply proper risk management on your portfolio. High leverage (e.g. more than 200) is very dangerous to NEW traders, who tend to place more trades (because each trade requires less margin). New traders also are less disciplined in using correct stop-loss and take-profit levels, which could result in holding onto multiple high-leveraged losing trades for too long, resulting in blown accounts very quickly.

I think you have a valid point if you are an experienced trader with a solid proven trading system. It makes sense to use high-leveraged accounts when a proven risk management strategy is applied.

But I would not advise any new trader to open a high leverage account (e.g. 1:500) on their first attempt at trading, while they are still very inexperienced in terms of risk and money management, solid technical and fundamental analysis as well as being able to handle the emotional stress associated with trading, especially manual trading.

Anyway, very interesting post indeed! smiley


Well even newbie trader could work with high leverage using fixed stop losses and lets say max XXX trades od size of YYY on account of ZZZ balance. Well ANY even newbie trader should have trading plan including position sizing based on leverage:)



Do you recommend me to work with high leverage?


That depends if you know how to control the risk

I like what I trade, I trade what I like
BillyBigNose

Member Since May 23, 2017  13 posts BillyBigNose Jun 27 at 06:21
In a way leverage is almost irrelevant to risk. Bad traders will lose money on a small leverage account or a larger leverage. It does not solve the problem of risk management. If anything it gives a false sense of security

togr

Member Since Feb 22, 2011  3819 posts vontogr (togr) Jun 27 at 10:08
BillyBigNose posted:
In a way leverage is almost irrelevant to risk. Bad traders will lose money on a small leverage account or a larger leverage. It does not solve the problem of risk management. If anything it gives a false sense of security


Exactly. Low leverage in fact force traders to deposit more capital to be able to trade.
Bad traders - majority of them - will lose that capital at the end.

I like what I trade, I trade what I like
danielcabreja

Member Since Jan 30, 2018  1 posts Jose Daniel (danielcabreja) Jun 27 at 14:16
More leverage = more buying power. Use with proper risk and you can 10x your profits. (The same way you can make money, you can lose money. You can 10x losses too)

togr

Member Since Feb 22, 2011  3819 posts vontogr (togr) Jun 28 at 06:32
danielcabreja posted:
More leverage = more buying power. Use with proper risk and you can 10x your profits. (The same way you can make money, you can lose money. You can 10x losses too)


Sure
first you have to have trading plan
when you are profitable you can scale up

I like what I trade, I trade what I like
Downtobusines

Member Since Jun 28, 2018  7 posts Downtobusines Jun 28 at 13:32
togr posted:

Sure
first you have to have trading plan
when you are profitable you can scale up


That is how it is done. Leverage large or small doesn't matter to most traders. Sensible ones will make money the bad ones will lose it all

togr

Member Since Feb 22, 2011  3819 posts vontogr (togr) Jun 29 at 06:51
Downtobusines posted:
togr posted:

Sure
first you have to have trading plan
when you are profitable you can scale up


That is how it is done. Leverage large or small doesn't matter to most traders. Sensible ones will make money the bad ones will lose it all

Wisely used leverage allows you to get the same profit with lower balance

I like what I trade, I trade what I like
Professional4X

Member Since Jan 05, 2016  622 posts Professional4X Jul 14 at 03:06
kebayamwamba posted:
with low leverage 99% of retail traders would never trade FX...



All US FX brokers have a hard limit of 1:50 for retail traders.

That's the maximum allowed, and it's been that way for quite some time.

To argue otherwise is completely pointless.


If it looks too good to be true, it's probably a scam! Let the buyer beware.
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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.