Marksteve posted: I don’t know, I haven’t used high leverage ever.
I think anyone can try their hands on high leverage once in a while. There is no such rule for that. Yes, the risk would be high but isn’t that the whole point of trading?
I agree with you. But sometimes, I feel like high leverage is only for expert traders and that it is difficult for others to minimise losses. I like to trade on demos along with the live accounts and it is somewhat easy to keep the leverage high on demos. Wish it was as easy on live. I’m using Fxview and XTB as my brokers now, still using my old account of Mitrade for demo and trying out different strategies including a higher leverage.
The two important concepts of forex money management is leverage and margin, Leverage allows traders to invest much more than available into their trading account whereas margin is the real amount that a trader needs to put forward in order to open a trade.
True, leverage can lead to both neg and pos results, but managing our funds is in our own hands. The better we handle our money, the more close we are to our goals. I always rebalance my positions in a trade if I get a bad signal from any indicator.
Money Management is THE KEY to all trading success Even if you win only 50% of your trades (2% Risk) on a Risk/Reward of 1:2 - after 10 trades you will have lost 10% and gained 20% = 10% gain! So you must design your system to pinpoint the opportunities where you have the best chance of reaching at least your x2 Reward target and never lose more than your 2% Risk on any trade. This is also the reason you will keep losing money, if your rewards are slim in relation to losses.
If you can practice 100% money management, you leverage, etc. will make no difference as your Risk : Reward stays constant - BUT you have to stick to the rules!
Money management is needed always actually, it doesn't matter whether you trade with leverages or not. Actually, if you will comply with money management and risk management practices then you will have less chances to blow your account. These rules are the main in trading activity and it's an inevitable part for every trader. Of course, there are some traders who like neglect money management practices, nevertheless they always lose their money because of this. Never try to take lots of risks on yourself without proper strategy and plan. It can lead to unpleasant consequences and can easily make you quit trading.
A trader should know proper money management and use the leverage to their advantage. Money management is the process of allocating funds in such a way that they can minimize losses and maximize gains. Leverage can be used to multiply gains or losses.
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.
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Past performance is not indicative of future results.