Your preference - what leverage to prove a system and still control risk?

Hi, thanks for peeking at this thread, I need your opinion.
What do you consider reasonable and safe leverage, for a system to employ, that you would consider using and paying for?
My system is nearly set to go cash live, and I'd like to know what you think, is aggressive to maximize time and profit, but still safe?

Thanks for sharing your thoughts.
John

1. Your Account_Leverage can be how much You want. It is no mater.
The bigger is better as You will have more free money (for unexpected movement)

2. The important is how mush of the possible Leverage You are using !!!
I think 10 is safe. (this is Used_Leverage)

3. Having low Account_Leverage give You safety,
only because You can't use High Leverage. (humans error are less risky)

1:5 - 1:10

Thanks Ivan. I agree 10 is safe. I would question though, is it also enough to maximize Time and Potential. Safety without profit is no gain. Profit without safety is no gain either.
Considering both sides of the equation are equally important to a successful system. Do you feel 10 is a satisfactory approach from a profit perspective as well?
If you think about why someone would buy a system, it's obviously to make money, rather than primarily protect money. But we both know, if you don't protect it , you won't make it. Appreciate any further thoughts you have . You did make a good point about 'real leverage versus maximum account leverage' I think that is the distinction that really matters the most.
Thanks
John

So what does leverage have to do with risk control ?

You can be at 1000:1 and still trade safely. Just because it's there doesn't mean you have to try use it.

What most people here miss is that high leverage can protect you from third party risk. No need for a long term big deposit with the broker. You keep a low balance, bail yourself out whenever, and if the broker goes under he doesn't take all your available capital with him.

Thanks Dmitry,
Presently I't runs at about 7 to 1 leverage, for my testing and training purposes. Set to a 5 pip spread, and from 6 to 3% stop.

 

I wouldn't probably go anywhere above x20-x30 on an EA. Now that volatility is back and on an EA which can't gauge the fear and the sentiment I would say x10 time leverage sounds about fine. That's my thoughts. But like Ivan said, that should be up to the person using the EA how much risk is willing to take for the money on stash. What if you have an EA which trades very frequently and lots of cash to invest than x10 isn't that bad a return either if you are generating 1% return, that would be 10%.

moneycoder posted:
Thanks Dmitry,
Presently I't runs at about 7 to 1 leverage, for my testing and training purposes. Set to a 5 pip spread, and from 6 to 3% stop.

 

I recommend that you limit the leverege. This will save you from emotional mistakes and tilt. So I advise not to pursue a large percentage of income per month. 25-60% per year, is more than enough. Just sit down and count in Excel. for example, if you put $ 5000 and you can make 60% a year - will earn 1 million dollars for 12 year of trading. With the reinvestment of profits of course. But if you're still going to invest monthly $ 500, the eay to a million be faster. but if your starting amount is not 5000 and say 10 thousand, 1 million will be about 4 years.

With a smaller amount of real leverage applied on each trade, you can afford to give your trade more breathing room by setting a wider but reasonable stop and avoiding risking too much of your money. A highly leveraged trade can quickly deplete your trading account if it goes against you, as you will rack up greater losses due to bigger lot sizes. Keep in mind that leverage is totally flexible and customizable to each trader's needs. Having an aim of trading profitably is not about making your millions by the end of this month or this year.

Leverage dont change amount of $ for every Pips earned so u can chose any leverage you like ,

lets say i have leverage 500 x 1 and i buy 1 lot witch will earn roughly 10 $ per pip
if change my leverage to 1000 x 1 and buy 1 lot i will still make roughly 10 $ per pip . Nothing will change acecpt that now i can buy more lots
it wont make any difference to your Losses or winnings it will only make a difference to the amount of lots you can buy with your money .

people who saying Big leverage will kill your account faster simply dont know what they talking about .



  

fx_book posted:
With a smaller amount of real leverage applied on each trade, you can afford to give your trade more breathing room by setting a wider but reasonable stop and avoiding risking too much of your money. A highly leveraged trade can quickly deplete your trading account if it goes against you, as you will rack up greater losses due to bigger lot sizes. Keep in mind that leverage is totally flexible and customizable to each trader's needs. Having an aim of trading profitably is not about making your millions by the end of this month or this year.

My reason for asking was not so much for myself, but to gauge what most people would prefer, for instance when following a trading system or trade copier. My System uses between 7 and 10 leverage.
I want my system to be appealing to others, as far as risk appetite goes.

I think I may start a new thread as well, to find out what is the best site(s) to use to make the most money from allowing trade copying of my [hypothetically profitable] trading system. In other words, if you have a successful trading system, and want to hook it up as a system that can allow others to copy the trades, what is the best site for capitalizing on that. Which one makes you the most money, and do must users prefer.

DrVodka posted:
Leverage dont change amount of $ for every Pips earned so u can chose any leverage you like ,

lets say i have leverage 500 x 1 and i buy 1 lot witch will earn roughly 10 $ per pip
if change my leverage to 1000 x 1 and buy 1 lot i will still make roughly 10 $ per pip . Nothing will change acecpt that now i can buy more lots
it wont make any difference to your Losses or winnings it will only make a difference to the amount of lots you can buy with your money .

people who saying Big leverage will kill your account faster simply dont know what they talking about .



  

I would ask this though. What would that 1 lot loss have been if one had been stuck long, in the euro during the cliff dive a week or so ago? Many couldn't get filled to get out fast enough. The higher leveraged accounts would have just escalated the losses automatically, but a lower leverage account should have closed the account before it could reach astronomical , catastrophic losses

John as i said before - Leverage dont change amount of $ for every Pip u make or loose .
u can have leverage 10 x 1 or 1000 x 1 ,
1 lot going to make u roughly 10 $ for every pip .No matter what leverage u have 10 x1 or 1000 x 1.


about the euro during the cliff dive a week or so ago . higher leverage would been better in that situation as leverage does not changes --- amount of $ for every Pip u make or loose if it drops 100 points you will loose 1000 $ no matter what leverage u may have .
open two demo accounts with 10x1 and 1000 x1 leverage and try it .

moneycoder posted:
Hi, thanks for peeking at this thread, I need your opinion.
What do you consider reasonable and safe leverage, for a system to employ, that you would consider using and paying for?
My system is nearly set to go cash live, and I'd like to know what you think, is aggressive to maximize time and profit, but still safe?

Thanks for sharing your thoughts.
John

Leverage has nothing to do with safety. Imagine you have open positions and broker change the leverage. This could force immediate position liquidation.
To control the risk you should properly limit your trade size and use stop losses Or equity protection.
Moreover low leverage does mean lower profit.

DrVodka posted:
Leverage dont change amount of $ for every Pips earned so u can chose any leverage you like ,

lets say i have leverage 500 x 1 and i buy 1 lot witch will earn roughly 10 $ per pip
if change my leverage to 1000 x 1 and buy 1 lot i will still make roughly 10 $ per pip . Nothing will change acecpt that now i can buy more lots
it wont make any difference to your Losses or winnings it will only make a difference to the amount of lots you can buy with your money .

people who saying Big leverage will kill your account faster simply dont know what they talking about .



  

@DrVodka
well leverage does affect your profit.

Lets say you made trade with profit of 100 pips (5 decimals). With trade size of 1 lot it does mean $100 profit.
With no leverage you need $113,000 balance to buy 1 lot = 100,000 EUR just to cover margin requirement.
With leverage of 1:1000 you just need $113 balance to open such trade.

So high leverage will allow you to get more profit with lower balance.

To limit the risk you should use money management, stop losses or equity protection.

vontogr@

no its not

 yes u can buy more lots with 1000x1 leverage then with 100x1

but it wont change amount of $ for every Pips u make or loose .

1 Lot = 100 000 contracts right ?

for 100 pips u will get 1000 $ profit ( roughly ) no matter what leverage u have 100 to 1 or 1000 to 1 thats the whole pont im trying to make .

1 lot gives u 10 $ per pip
0.50 lot gives u 5 $ per pip
0.10 lot gves u 1 $ pep pip
no matter what leverage u may have .

Errrm if you can buy more lots that will obviously affect your P&L.

Your profit factor will not be affected by leverage ONLY if you buy the same amount of lot as you would buy or higher/lower/no leverage. In other words if you don't use one of the benefits of higher leverage, ie buy more lots for lower nominal balance.

Say you buy 100,000 EUR/USD at no leverage = around 113k USD. 1pip gain = 10USD per pip as you say.
Now, if you have x10 leverage you can buy the same lot for only 10k, and if you can still afford the 113k USD investment it is quite natural that you will make the same befit of going for 100kx10, so then you will have 10 lots where 1pip = 100USD profit per pip. Again if you do the same for x100 leverage assuming you have the initial 113k nominal capital to invest that's gonna bring a 1pip profit to 1k USD..... You will be faced with the dilemma whether to leverage up both profit and loss for the lower capital, then again the question is why leverage at all if you will be boosting up the loss possibility in ABSOLUTE terms.

Anybody who trades at leverage at x200 or above is risking far too much in these markets if they are making use of the benefit of the leverage, in other words stack up more positions at a lower capital. It requires damn good risk management and experience.

DrVodka posted:
vontogr@

no its not

 yes u can buy more lots with 1000x1 leverage then with 100x1

but it wont change amount of $ for every Pips u make or loose .

1 Lot = 100 000 contracts right ?

for 100 pips u will get 1000 $ profit ( roughly ) no matter what leverage u have 100 to 1 or 1000 to 1 thats the whole pont im trying to make .

1 lot gives u 10 $ per pip
0.50 lot gives u 5 $ per pip
0.10 lot gves u 1 $ pep pip
no matter what leverage u may have .

@DrVodka
It is quite easy.
If you have trade with 10 pips of profit than the amount of $profit is determined by trade size.
So trade of 1 lot will bring you 100 times more profit than trade of 0.01 lot.
The higher leverage the higher trades you can do with given balance.
The higher lot sizes the higher profit.

Unless he is talking of not taking advantage of the higher leverage to buy more lots.... then again why leverage at all?