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High leverage , High risk ?
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AmDiab

Member Since Apr 18, 2017  672 posts AmDiab Nov 11 2018 at 08:18
millerwe posted:
RichPort posted:
That is a lot of the problem here. People assume high leverage is high risk and low leverage is lower risk but it is all about how you set up a trade and manage your account. I dumb trader can wipe out an account on low leverage just as easy as high leverage

totally agreed. people need to understand how money management works and operates that's the main issue. leverage can result into huge profits if money and risk management are done right.


I agree with you mate! Traders need to consider the money management issue so sincerely! Unless having a good plan, high leverage would be costly for sure.

jamesgwyther

Member Since Aug 05, 2017  289 posts jamesgwyther Nov 12 2018 at 09:14
AmDiab posted:
millerwe posted:
RichPort posted:
That is a lot of the problem here. People assume high leverage is high risk and low leverage is lower risk but it is all about how you set up a trade and manage your account. I dumb trader can wipe out an account on low leverage just as easy as high leverage

totally agreed. people need to understand how money management works and operates that's the main issue. leverage can result into huge profits if money and risk management are done right.


I agree with you mate! Traders need to consider the money management issue so sincerely! Unless having a good plan, high leverage would be costly for sure.


Money Management is probably more important even than your trading strategy.

pipsKeeper

Member Since Nov 08, 2018  19 posts pipsKeeper Nov 13 2018 at 11:55
TeraPips posted:
pipsKeeper posted:
All that was posted before here is really true. I have some question. Why it's more often when brokers suggest beginners to start with a big leverage? The issue is beginner will lose more with the leverage of 1:1000. I suppose that it's better to start with small (1:100 for example).


Agree with 1:100 but make sure you have basic knowledge of using it through demo and be aware of your psychology issues which should not interfere trading. You won't want to blow account quickly (with overtrading or revenge trading which is common).
You are right. I did not take into account the fact that a beginner often does not have good money management. The leverage 1:100 should be used with balanced strategy.

Jingyi

Member Since Nov 15, 2018  8 posts Jingyi Nov 15 2018 at 11:19
A beginner will lose it all on 1:1000 or 1:10. I think there should be enforced use of demo account for 1 month before open live account and a video course on risk management that all traders must watch before account is opened. That would help people a lot more

togr

Member Since Feb 22, 2011  4831 posts vontogr (togr) Nov 15 2018 at 14:36
Jingyi posted:
A beginner will lose it all on 1:1000 or 1:10. I think there should be enforced use of demo account for 1 month before open live account and a video course on risk management that all traders must watch before account is opened. That would help people a lot more


Even after ESMA which limits leverage drastically there is no decrease of losing traders.

TiffanyK

Member Since Feb 12, 2016  427 posts Tiffany (TiffanyK) Nov 16 2018 at 08:37
togr posted:
Even after ESMA which limits leverage drastically there is no decrease of losing traders.

Indeed. The only difference is that they have to deposit bigger amounts of money in order to lose.

Accept the loss as experience
Imamul

Member Since Aug 09, 2017  518 posts Imamul Nov 18 2018 at 12:50
For avoiding risk I always use 1:100 leverage in spite of having up to leverage 1:2000 , actually leverage is an important financial tool which always contains risk , so it is better if we avoid using high leverage in real account.

Adribaasmet

Member Since Aug 27, 2017  859 posts Adribaasmet Nov 19 2018 at 11:11
Imamul posted:
For avoiding risk I always use 1:100 leverage in spite of having up to leverage 1:2000 , actually leverage is an important financial tool which always contains risk , so it is better if we avoid using high leverage in real account.


Same to me! I think, most of the retail traders who are aware of money management issue they are playing with 1:100 trading leverage.

Mohammadi

Member Since Aug 11, 2017  787 posts Mohammadi Nov 24 2018 at 10:21
Trading with high leverage in demo account is right decision , because leverage contains always higher risk in live account , it could be dangerous at any time despite of most accurate trading plan .

Adribaasmet

Member Since Aug 27, 2017  859 posts Adribaasmet Nov 25 2018 at 08:14
Mohammadi posted:
Trading with high leverage in demo account is right decision , because leverage contains always higher risk in live account , it could be dangerous at any time despite of most accurate trading plan .


I don’t think it’s a good idea. Because, we need to treat in the demo as like our live. Same strategy, same plan even same mental preparations.

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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.