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.
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.
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.
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.