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High leverage , High risk ?
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Wamski

Member Since Feb 06, 2017  31 posts wamiikechukwu (Wamski) Oct 10 2017 at 06:34
CoolKimOne posted:
$100 x 1000 = 100,000 . Could you afford to lose that?


if i may get you right, the 100,000 , is my trading volume, the amount of money i can use to trade.

Tomorrow is far away but yesterday is so close.
Wamski

Member Since Feb 06, 2017  31 posts wamiikechukwu (Wamski) Oct 10 2017 at 06:34
togr posted:
Wamski posted:
i have an account of 1:1000 using $100, so am i safe.

i also need someone to explain the difference and complication of using high leverage


High leverage has an advantage. It allows you to trade as without leverage with $100 you cant trade at all.
Low leverage is by many understood as account protection as with low leverage your loosing trades are liquidated early.
For experienced users there are many other tools how to protect your equity despite high leverage.


please correct me if am wrong, i believe the 'your loosing trades are liquidated early. ' is mainly based on your lot size.

Tomorrow is far away but yesterday is so close.
togr

Member Since Feb 22, 2011  4786 posts vontogr (togr) Oct 10 2017 at 14:39
Wamski posted:
togr posted:
Wamski posted:
i have an account of 1:1000 using $100, so am i safe.

i also need someone to explain the difference and complication of using high leverage


High leverage has an advantage. It allows you to trade as without leverage with $100 you cant trade at all.
Low leverage is by many understood as account protection as with low leverage your loosing trades are liquidated early.
For experienced users there are many other tools how to protect your equity despite high leverage.


please correct me if am wrong, i believe the 'your loosing trades are liquidated early. ' is mainly based on your lot size.

Lets look into details.
Lets say i trade 0.01 EURUSD on 1,030 EUR account.
0.01 lot represents 1,000 units.
Lets assume marklet moves against you $100 and then moves $100 in positive.

1. Without leverage
So to open such trade I would need 1000 EUR for margin. 30 EUR is left to cover trade negative. If markets move against me $30 and I reach stop out my position will be liquidated early.
2. With 1:2 leverage I would need 500 EUR for margin. 530 EUR is left to cover trade negative.If markets move against me $530 and I reach stop out my position will be liquidated early

So with the same position trade outcome is different.

Wamski

Member Since Feb 06, 2017  31 posts wamiikechukwu (Wamski) Oct 12 2017 at 06:45
Oh thanks vontogr smiley for explaining.


Tomorrow is far away but yesterday is so close.
togr

Member Since Feb 22, 2011  4786 posts vontogr (togr) Oct 12 2017 at 14:46
Wamski posted:
Oh thanks vontogr smiley for explaining.



of course the risk could be limited by EAs or stop losses

Mohammadi

Member Since Aug 11, 2017  751 posts Mohammadi Nov 19 2017 at 08:22
Many traders consider leverage as a borrowed of money. But in order to me , it is not a borrowed money but you use your money (capital) as leverage. Meaning you are betting your own money and increase or decrease the stake of risk by increasing or decreasing your leverage. for example if you use 1:100 leverage that mean if you going to incur loses your loses will be 100 times that your actual loses or if you make profit your profit will be 100 times more than the actual profit.

Snorre

Member Since Oct 19, 2017  11 posts Snorre Nov 21 2017 at 07:31
You can lose more than your deposit so high leverage is scary

Mohammadi

Member Since Aug 11, 2017  751 posts Mohammadi Aug 19 2018 at 08:55
high leverage and minimum margin requirement are an important financial tool which an investor should consider when choosing a broker. but generally high leverage causes a great losses if there is no real money management.  

LongVision

Member Since Apr 06, 2018  253 posts LongVision Aug 19 2018 at 18:53
Mohammadi posted:
high leverage and minimum margin requirement are an important financial tool which an investor should consider when choosing a broker. but generally high leverage causes a great losses if there is no real money management.  

This comment make no sense. First you say high leverage is an important financial tool then you say high leverage can cause great losses. You need clarity of thought before posting.

The market will trade through it’s path of least resistance .
LongVision

Member Since Apr 06, 2018  253 posts LongVision Aug 19 2018 at 19:03
if you are taking 1-2% risk per trade and trading few currency pair you may need leverage of 1:10 only. So most of time you are using only part of leverage that is provided by broker if you use strict money management.

The market will trade through it’s path of least resistance .
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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. Past performance is not indicative of future results.