High leverage , High risk ?

By and large traders who are particularly newcomers always fall a great loss due to non-sense planning and zero risk management plan, so before trading with high leverage it is more important to know how to manage risk.

The higher leverage is not the problem, the missing knowledge of the trader is a big problem! You can lose the same way with a low leverage account

TiffanyK posted:
The higher leverage is not the problem, the missing knowledge of the trader is a big problem! You can lose the same way with a low leverage account

Exactly.
Moreover for underfunded account of beginner trader leverage is a must. Otherwise he cant trade at all.

Agree with you; without enough knowledge! High trading leverage would be costly! BY the way, knowledgeable traders can use this facility so smartly.

Most traders fail because of using too much leverage.

More like : 'Most traders fail because THEY THINK using too much leverage MEANS MORE PROFIT.' which is absolutely crazy :)

TiffanyK posted:
The higher leverage is not the problem, the missing knowledge of the trader is a big problem! You can lose the same way with a low leverage account

exact, the merchant's knowledge is a big problem.

i have an account of 1:1000 using $100, so am i safe.

i also need someone to explain the difference and complication of using high leverage

$100 x 1000 = 100,000 . Could you afford to lose that?

Wamski posted:
i have an account of 1:1000 using $100, so am i safe.

i also need someone to explain the difference and complication of using high leverage

High leverage has an advantage. It allows you to trade as without leverage with $100 you cant trade at all.
Low leverage is by many understood as account protection as with low leverage your loosing trades are liquidated early.
For experienced users there are many other tools how to protect your equity despite high leverage.

CoolKimOne posted:
$100 x 1000 = 100,000 . Could you afford to lose that?

if i may get you right, the 100,000 , is my trading volume, the amount of money i can use to trade.

togr posted:

Wamski posted:
i have an account of 1:1000 using $100, so am i safe.

i also need someone to explain the difference and complication of using high leverage

High leverage has an advantage. It allows you to trade as without leverage with $100 you cant trade at all.
Low leverage is by many understood as account protection as with low leverage your loosing trades are liquidated early.
For experienced users there are many other tools how to protect your equity despite high leverage.

please correct me if am wrong, i believe the 'your loosing trades are liquidated early. ' is mainly based on your lot size.

Wamski posted:

togr posted:

Wamski posted:
i have an account of 1:1000 using $100, so am i safe.

i also need someone to explain the difference and complication of using high leverage

High leverage has an advantage. It allows you to trade as without leverage with $100 you cant trade at all.
Low leverage is by many understood as account protection as with low leverage your loosing trades are liquidated early.
For experienced users there are many other tools how to protect your equity despite high leverage.

please correct me if am wrong, i believe the 'your loosing trades are liquidated early. ' is mainly based on your lot size.

Lets look into details.
Lets say i trade 0.01 EURUSD on 1,030 EUR account.
0.01 lot represents 1,000 units.
Lets assume marklet moves against you $100 and then moves $100 in positive.

1. Without leverage
So to open such trade I would need 1000 EUR for margin. 30 EUR is left to cover trade negative. If markets move against me $30 and I reach stop out my position will be liquidated early.
2. With 1:2 leverage I would need 500 EUR for margin. 530 EUR is left to cover trade negative.If markets move against me $530 and I reach stop out my position will be liquidated early

So with the same position trade outcome is different.

Oh thanks vontogr 😄 for explaining.

Wamski posted:
Oh thanks vontogr 😄 for explaining.

of course the risk could be limited by EAs or stop losses

Many traders consider leverage as a borrowed of money. But in order to me , it is not a borrowed money but you use your money (capital) as leverage. Meaning you are betting your own money and increase or decrease the stake of risk by increasing or decreasing your leverage. for example if you use 1:100 leverage that mean if you going to incur loses your loses will be 100 times that your actual loses or if you make profit your profit will be 100 times more than the actual profit.

You can lose more than your deposit so high leverage is scary

high leverage and minimum margin requirement are an important financial tool which an investor should consider when choosing a broker. but generally high leverage causes a great losses if there is no real money management.  

Mohammadi posted:
high leverage and minimum margin requirement are an important financial tool which an investor should consider when choosing a broker. but generally high leverage causes a great losses if there is no real money management.  

This comment make no sense. First you say high leverage is an important financial tool then you say high leverage can cause great losses. You need clarity of thought before posting.