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High leverage = High risk?
Membre depuis Oct 29, 2020
posts 47
Feb 08, 2021 at 08:04
Membre depuis Oct 29, 2020
posts 47
forextrader777 posted:
High leverage attracts new traders but few of them know the actual working of leverage. I would recommend that before pushing yourself into the trades that need margin, try to understand the concept clearly, otherwise it can wipe off your account balance.
Yes, I am taking my sweet time to be thorough with trading concepts.
Membre depuis Jul 17, 2020
posts 29
Membre depuis Sep 18, 2018
posts 11
Feb 15, 2021 at 10:34
Membre depuis Sep 18, 2018
posts 11
Everyone should use fixed stops, even if it is a safety stop loss wider than normal. All it takes is some political event to shake the markets just after you entered to cause massive price spike. Without a safety SL you could make massive losses
Membre depuis Nov 24, 2020
posts 14
Feb 16, 2021 at 10:04
Membre depuis Nov 24, 2020
posts 14
@Eric ideally, you shouldn’t risk more than 1 or 2% of your trade. It also depends upon the trading style of a person and how much they’re willing to risk. For example, I trade with IB and Fxview and my risk management is such that I don’t go beyond risking 2% of it. This helps me maintain a balance and minimises potential losses too.
Membre depuis Oct 01, 2020
posts 27
Membre depuis Jan 17, 2021
posts 29
Membre depuis Oct 29, 2020
posts 47
Membre depuis Oct 29, 2020
posts 47
Feb 25, 2021 at 13:56
Membre depuis Jun 08, 2020
posts 40
High leverage is considered risky because when a trader loses in a trade with high leverage, the loss also results in a large amount, whereas if the trader can convert it into a successful trade, the profit earned is more than the invested amount.
Membre depuis Jul 23, 2020
posts 816
Membre depuis Jul 20, 2019
posts 338
Feb 27, 2021 at 14:25
Membre depuis Jul 20, 2019
posts 338
unsightlydray posted:78678676 posted:
A higher leverage is way too risky, specially for a newbie who can end up getting himself trapped in a bad debt.
Debt?? I don’t intend to take up a loan for trading, as wrongly (I think) suggested by a friend!
Actually "leverage" just means that you'll get a "credit" from a bank or liquidity provider of the broker. A max. account leverage of 1:500 means that you can trade with a maximum of 500k per trade (!) while you'll only throw in 1k of your own money. But if you'll lose 2k in that trade, where does the other 1k come from then? Right, it comes from your deposits (and that's how can get into debt). Most professional brokers have a negative balance stop out. But the higher your leverage the higher the chance you'll get to this stop out.
patience is the key

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