High leverage , High risk ?

Adribaasmet posted:

TeraPips posted:
It's very important to have good or acceptable risk level, not really wise to get into high risk without good experience.

Yes mate, risk reward ratio is very much important. On the other hand, I see overtrading is one of the most common problem here! By the way, in my trading I never go for more than 2% risk ratio in my per trade.

yes, it was my problem as well, you did good.

korson posted:
Higher the risk higher the reward and vice versa.

Let me interpret it for newbie in trading 'higher the risk, higher the losses'.

well said @TeraPips for newbies it is like higher the risk higher the losses, that's why it is very important to learn how to manage the risk.

I think it is more about what you do with the given leverage rather than how much you are using. Newbies are inexperienced that is why they are told to go with low leverage. Low or high leverage, you should be smart enough to manage your risk.

jnimc posted:
well, it's not always true - most of the big guys trade without risk... cos if in trouble they are bailed out 😄

Mate, what did you mean by without risk? Because, I know; there is nothing like 100% in Forex, it’s all about probabilities. Thanks in advice.

That is a lot of the problem here. People assume high leverage is high risk and low leverage is lower risk but it is all about how you set up a trade and manage your account. I dumb trader can wipe out an account on low leverage just as easy as high leverage

Adribaasmet posted:

jnimc posted:
well, it's not always true - most of the big guys trade without risk... cos if in trouble they are bailed out 😄

Mate, what did you mean by without risk? Because, I know; there is nothing like 100% in Forex, it’s all about probabilities. Thanks in advice.

really big - they own markets, set rules etc. Like JP Morgan & silver, Govs & housing... too big to fail etc. Everyone else: risk management, Sharpes are very important... 😄

In Fx trading , leverage is useful for trader , especially if trader start with small balance hence with leverage it will giving opportunity to making transaction on Fx market , now some broker offer high leverage until 1:1000 but so far I am only use leverage 1:400 as maximum.

korson posted:
Higher the risk higher the reward and vice versa.

true. to earn big you need to risk big.

RichPort posted:
That is a lot of the problem here. People assume high leverage is high risk and low leverage is lower risk but it is all about how you set up a trade and manage your account. I dumb trader can wipe out an account on low leverage just as easy as high leverage

Exactly.
Closing losing trade is OK. But when this happens too often due to low leverage you wipe the account as well.

1:400 is plenty but 1:50 is too low. I would have preferred to see a limit of at least 1:100 or 1:200 . Can't really do much with 1:50 unless you have thousands of dollars. Yet again the government is oppressing the little guy

togr posted:

RichPort posted:
That is a lot of the problem here. People assume high leverage is high risk and low leverage is lower risk but it is all about how you set up a trade and manage your account. I dumb trader can wipe out an account on low leverage just as easy as high leverage

Exactly.
Closing losing trade is OK. But when this happens too often due to low leverage you wipe the account as well.

No way to ignore this issue! But, I see maximum traders are interested to trade with a high trading leverage so, trading with low trading leverage is not common!

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

Please explain more.

Surely if he has an account with $100 and he lost it all that would be it?

Could he have a negative account?

In that instance would or could the broker take the money even if it's not in his account?

Guys,

you need to separate 2 terms
1. account leverage 1:1 - 1:3000. Even with account of 1:3000 you can trade safely - not overtradings, limiting risk by using SL.
2. used leverage - if you overtrade your positions you will lose regardless the leverage of the account, though on low leverage it will be slower.

Cons - with lower leverage you make less profit, you can't make profit

togr posted:
Guys,

you need to separate 2 terms
1. account leverage 1:1 - 1:3000. Even with account of 1:3000 you can trade safely - not overtradings, limiting risk by using SL.
2. used leverage - if you overtrade your positions you will lose regardless the leverage of the account, though on low leverage it will be slower.

Cons - with lower leverage you make less profit, you can't make profit

Exactly, trading with high trading leverage but with a proper money management; is not any worried issue here! If traders follow money management properly, it’s always okay!

All that was posted before here is really true. I have some question. Why it's more often when brokers suggest beginners to start with a big leverage? The issue is beginner will lose more with the leverage of 1:1000. I suppose that it's better to start with small (1:100 for example).

pipsKeeper posted:
All that was posted before here is really true. I have some question. Why it's more often when brokers suggest beginners to start with a big leverage? The issue is beginner will lose more with the leverage of 1:1000. I suppose that it's better to start with small (1:100 for example).

Agree with 1:100 but make sure you have basic knowledge of using it through demo and be aware of your psychology issues which should not interfere trading. You won't want to blow account quickly (with overtrading or revenge trading which is common).

RichPort posted:
That is a lot of the problem here. People assume high leverage is high risk and low leverage is lower risk but it is all about how you set up a trade and manage your account. I dumb trader can wipe out an account on low leverage just as easy as high leverage

totally agreed. people need to understand how money management works and operates that's the main issue. leverage can result into huge profits if money and risk management are done right.

millerwe posted:

RichPort posted:
That is a lot of the problem here. People assume high leverage is high risk and low leverage is lower risk but it is all about how you set up a trade and manage your account. I dumb trader can wipe out an account on low leverage just as easy as high leverage

totally agreed. people need to understand how money management works and operates that's the main issue. leverage can result into huge profits if money and risk management are done right.

I agree with you mate! Traders need to consider the money management issue so sincerely! Unless having a good plan, high leverage would be costly for sure.

TeraPips posted:

pipsKeeper posted:
All that was posted before here is really true. I have some question. Why it's more often when brokers suggest beginners to start with a big leverage? The issue is beginner will lose more with the leverage of 1:1000. I suppose that it's better to start with small (1:100 for example).

Agree with 1:100 but make sure you have basic knowledge of using it through demo and be aware of your psychology issues which should not interfere trading. You won't want to blow account quickly (with overtrading or revenge trading which is common).

You are right. I did not take into account the fact that a beginner often does not have good money management. The leverage 1:100 should be used with balanced strategy.