Well, I would say that leverage is not vital for trading. I mean that you can easily do without leverage, however, you will have smaller profits. To tell you the truth, I think that the newbies should stay away from trading with leverage because not every beginner understands how to evaluate the risks which they have within a concrete deal. Before trading with leverage you should understand how to measure the risks and manage your budget in order not to lose everything within sheer minutes. Later on you can think of using leverage in your trading but with caution. You definetely should be aware of money and risk management in order to make your trading more or less safe for your budget. Speaking of high and low leverage, it is important to note that the higher leverage you have, the more risks you take. I don't see any problems of trading with huge leverage. The only thing is that you should be careful about the position size. You can regulate it as if you wish.
Leverages aren't important in trading at all actually. Here everything depends on whether you like leverage traing or not. If you understand that you can't take such risks at you, then perhaps you have to stay off leverage trading and when you're choosing a broker you should pay attention to other criteria. Some traders prefer leverage trading and they always try to find a broker which would provide the highest leverage. These traders are really crazy in my opinion, because leverage trading requires lots of experience and skills. In fact, there is only 5% of traders around the world who can trade with leverages and earn money.
As usual, you need to find the golden mean. If the leverage is too high, then, surely, the potential profits will high, but you will run more risks. Somtimes the leverage can lose $100 within a minute, that is why I strongly recommend to trat leverage with caution. It is hard to say what leverage should be specifically because we all are different and one man's meat is another man's poison. So, you should decide for yourself.
I believe that all traders decide on their own, whether leverage trading is important for them or not. The matter here is to understand how much place leverage trading takes in your trading activity. If you try to stay away of the leverage trading, because you are afraid of facing such risks, then of course, it will be quite difficult for you claim that leverage trading is significant for you. Probably, you will tell that you don't care about it at all. Some traders who are fond of leverage trading might say that leverage trading means everything for them because it brings the money. Here everything is pretty individual.
skihav posted: I think this is important. But in general, in trading, many aspects are important. And it is important to understand that if you do not pay attention to one of them, losses are possible.
UweMoench posted: Many options in using leverage, and in theory and risk, using smaller is better, as I use leverage to keep the 1:100, do not let too many open positions
I agree with you, having too many open positions while using leverage can be disastrous. It is pivotal to choose the right lot size and risk management when using high leverage, otherwise, go for small.
Leverage is indeed an important tool for a forex trader. By using leverage, traders can have the opportunity to earn bigger profits than they can manage to earn with the capital they possess. Low leverage is good for beginners but as they get confident, they can go for a higher leverage to earn more profits.
The forex market uses leverage to allow you to control higher positions than the amount of money in your account. Leverage is often expressed in terms of a ratio. If the leverage is 100:1, you can manage a position worth $100 with just $1. The amount of profit as well as the amount of loss that can be made in the forex market is determined by this. Essentially, it functions as a double-edged sword.
When you trade using leverage, you will need to consider the possibility of losing more than your initial deposit. In fact, you can lose as much as your account balance multiplied by the leverage value. A trader should always use proper money management in order to ensure safe trading.
As a trader we should take the leverage very seriously. Over leveraged can put you into substantial risk and if under leveraged then you may miss the opportunity. I use leverage when advantage is crystal clear. it is important to track the positions and apply stop loss with each trade so that your capital remains in the protected zone.
I have recently talked to my friend. He’s a professional Forex trader and we discussed leverage. I thought that the higher your leverage the faster your depo will grow. As for risks, I certainly thought about them but at that time my mind was overclouded with higher gains. So, my friend told that he earned more with smaller leverage or even without it. I remember that it puzzled me. I asked him to explain this and he told that theoretically with higher leverage a trader can increase his depo much faster but it’s all very unreliable. The matter is that with higher leverage, it’s getting harder to control emotions and even a single mistake may cost too much. There’s one cunning thing about high leverage. You need less margin with higher leverage and it encourages you to trade more aggressively and take a lot of risks throughout the day. You might think that you can start with a relatively small trading deposit and achieve fantastic results. Theoretically, it’s all possible but it’s very hard to make it comes, mostly impossible. My friend told me that market makers have a dozen of cunning traps at hand and it’s a problem to survive their traps with higher leverage. You may even understand the very nature of deceptive market moves but higher leverage can make your already open trades extremely vulnerable. On the contrary, with smaller leverage, it’s much easier to survive any pullback and then get back in the green and it’s especially true for 1:1 or 1:5 leverage. They are safe. I tested various leverage sizes on a demo account and saw with my own eyes that my bro was right.
WARNUNG VOR HOHEM RISIKO: Der Devisenhandel birgt ein hohes Risiko, das möglicherweise nicht für alle Anleger geeignet ist.
Der Einsatz von Leverage schafft zusätzliches Risiko und Verlustgefahr. Bevor Sie sich für den Devisenhandel entscheiden, sollten Sie Ihre Anlageziele, Ihr Erfahrungsniveau und Ihre Risikotoleranz sorgfältig prüfen.
Sie könnten Ihre ursprüngliche Investition teilweise oder ganz verlieren. Investieren Sie kein Geld, das Sie sich nicht leisten können, zu verlieren. Informieren Sie sich über die mit dem Devisenhandel verbundenen Risiken und lassen Sie sich von einem unabhängigen Finanz- oder Steuerberater beraten, wenn Sie Fragen haben.
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