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High leverage , High risk ?
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ChenChenGu

Member Since Aug 20, 2018  6 posts ChenChenGu Aug 20 2018 at 13:35
One would need big account for risk 1-2% . If I do that i make only cents on a trade. What the point then

Adribaasmet

Member Since Aug 27, 2017  842 posts Adribaasmet Aug 20 2018 at 13:37
LongVision posted:
 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.


Yes, 1-2% is the decent amount; trading with an aggressive trading leverage is always costly. In addition, money management is one of the most important issue here.

CarlosMZ

Member Since Apr 07, 2015  55 posts Carlos (CarlosMZ) Aug 22 2018 at 06:37
Guys, guys... hold your horses.
The leverage used has nothing to do with risk management.
Those are two completely separate things.

You can risk 2% with 1:1 leverage and with 1:500 leverage.

arcadio

Member Since Aug 23, 2018  2 posts arcadio Aug 23 2018 at 14:13
CarlosMZ posted:
Guys, guys... hold your horses.
The leverage used has nothing to do with risk management.
Those are two completely separate things.

You can risk 2% with 1:1 leverage and with 1:500 leverage.


I totally agree with this. Leverage itself is only a tool and has nothing to do with risk. Its your choice how you use it. Limiting leverege for everybody is like banning sharp knives because some people could harm themselves.

thanamfx

Member Since Aug 29, 2018  4 posts Thanam FX (thanamfx) Sep 02 2018 at 07:03
CarlosMZ posted:
Guys, guys... hold your horses.
The leverage used has nothing to do with risk management.
Those are two completely separate things.

You can risk 2% with 1:1 leverage and with 1:500 leverage.



if you are unitising 500 leverage you can't

$100 account 500 = 50000
if you open 0.5 lot
spread itself almost 5% and -10 pip is margin call on most broker



TeraPips

Member Since Sep 03, 2018  19 posts TeraPips Sep 03 2018 at 13:40
It looks like risky but it's not really risky in our understanding. The only difference between leverages is bad to worse differences in losses. Right mindset or sound knowledge is much suitable for right use of leverage, gambling can blew up your account too early.

togr

Member Since Feb 22, 2011  4786 posts vontogr (togr) Sep 03 2018 at 13:55
TeraPips posted:
It looks like risky but it's not really risky in our understanding. The only difference between leverages is bad to worse differences in losses. Right mindset or sound knowledge is much suitable for right use of leverage, gambling can blew up your account too early.


Leverage has nothing to do with money management.
With good money management + high leverage you can have higher profit and the same compared to low leverage

LikeMustard

Member Since Aug 29, 2018  10 posts LikeMustard Sep 03 2018 at 14:41
That is so right. People lose money because they don't use money management techniques or use a rubbish strategy. Leverage has nothing to do with it. I could use a 1:1000 leverage account but with proper usage or Lot sizing and stop loss I can safely manage my losses

voketexpert

Member Since Aug 30, 2018  25 posts Voket EA (voketexpert) Sep 04 2018 at 14:02
The bigger the amount of leverage on the capital you apply, the higher the risk that you will get. Note that this risk is not always related to leverage-based margins although it can affect if a trader is not careful.

Pips are absolute aphrodisiac, so trade with your brain not your lust. Forex will always be the same.
togr

Member Since Feb 22, 2011  4786 posts vontogr (togr) Sep 05 2018 at 10:31
voketexpert posted:
The bigger the amount of leverage on the capital you apply, the higher the risk that you will get. Note that this risk is not always related to leverage-based margins although it can affect if a trader is not careful.


I have a feeling you mix up 2 kind of leverage
- leverage provided by your broker - the higher the better (though the highest values come from obscure brokers)
- leverage used when trading - yes trading big lots on small deposit is risky. But such risk is not controlled by leverage but by tools like stop loss and equity protecton.

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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.