the higher leverage can magnify your profits and losses by the same degree. with higher leverage if you’re having big profits, you can have big losses as well therefore, the higher is the leverage, the higher risk you’re taking.
Admoni posted: By and large traders who are particularly newcomers always fall a great loss due to non-sense planning and zero risk management plan, so before trading with high leverage it is more important to know how to manage risk.
There is a simple answer to it, higher the leverage lower is the margin requirement. But higher the leverage higher the risk.
Forex trading is the most risky business because of it's high leverage facilities. It becomes more risky when novice traders open big lots. As a result they get margin call every now and then. You need to be smart to make consistent profit.
No doubt it is high risk but it gives the high profits in returns as well if it goes in your favour. It is all in our mind. I personally believe in order to gain you need to take risks however I am not denying the fact that one should have enough knowledge before that.
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.
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