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How true is High leverage = High risk?
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Member Since Sep 30, 2020  13 posts Nov 12 at 07:22
Are high and low leverage two sides of the same coin? I have started fresh in forex and not able to make a right judgment for a good leverage.

Not sure how correct it is to say there are high risks with high leverage.

Recommendations needed from experience holders.

Bela_fx

Member Since Nov 02, 2020  10 posts Bela_fx Nov 12 at 07:55
Leverage is like a double edged sword so it should be used wisely.

Markwoods

Member Since Sep 30, 2020  13 posts Markwoods Nov 12 at 08:26
Leverage sure is a double-edged sword, but without leverage trading would not bring in any scalable results. That is unless you have heaps of money to invest. How much would a movement of few pips give on 3 or 4k. That also might be considered a big amount for a lot of current investors in the market. Considering most are part-timers, and some even college lads.
Had it not been for leverage, I would have stopped after meagre earnings. Still trading solely because of high leverage.

Darrensmith

Member Since Oct 01, 2020  12 posts Darrensmith Nov 12 at 10:57
I find it too risky to use leverage. Can’t imagine owing money to the broker and defeat the whole purpose of being in the market.

Mauk

Member Since Aug 26, 2020  20 posts Mauk Nov 12 at 11:38
Of course, the best option would be to trade with your own funds, but, unfortunately, not everyone can afford it, so leverage is a very good help.

shaunmarsh

Member Since Oct 05, 2020  32 posts shaunmarsh Nov 12 at 13:01
If you use a broker that offers negative balance protection, there’s no way that you’ll be risking owing anything to the broker. Then there’s stop loss as well to the rescue. If I’m not wrong all brokers offer these features, and if yours don’t, simply transfer your funds to a better broker.

Indorder

Member Since Mar 01, 2018  13 posts Indorder Nov 12 at 13:16
I do not think that ECN brokers offer negative balance protection. Using high leverage with a stop loss is fine unless the market turns against you massively and you end up millions of $$ in debt

DoraWalletInvest

Member Since Aug 17, 2020  109 posts DoraWalletInvest Nov 12 at 16:14
I think it is correct to say there is high risk involved when using high leverage.

But of course, trading is risky to some degree no matter what form of trading you do. Whether you trade with or without leverage, it is possible to trade in a smart way, managing risks well, or in a silly way, losing more than necessary.

However, the point of leveraged trading is amplifying your gains, but if you think about it, your losses will be amplified, too. If you don't have experience, experiment in a demo account or cent account first, and avoid doing real leverage trading until you are confident you can be profitable. Make sure to learn how to place orders, especially stop loss orders correctly, and when choosing a broker, be aware of their liquidation policies.

Marksteve

Member Since Jul 03, 2020  16 posts Marksteve Nov 16 at 04:48
I doubt if Robinhood offers negative balance protection

EbonyJones

Member Since Jul 20, 2020  165 posts EbonyJones Nov 19 at 18:26
Leverage is very profitable for those who have proper knowledge about it. If you don't have any knowledge about leverage you will face a great lose if you use high leverage.

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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.