TiffanyK posted: This question has been asked many times. Leverage is useful if you REALLY know how to use it. Higher Leverage = Higher Risk.
Not necesarily You can wipe account even with low leverage. So what is the real risk? Lets say we would like to open 1 lot EURUSD. With stop loss and take profit 10.0 pips. Aiming to gain or loose $100.
A. without leverage you need 100,000*1.20000 = $120,000 to open trade. In case of profit you make $100 which is 100/120000*100 = 0.08% profit
B. with leverage 1:1000 you need 100,000*1.20000/1000 = $120. To be comfortable lets say you need 1000 balance. In case of profit you make $100 which is 100/1000*100 = 10% profit.
Of course the same apply to loss but that is another aspect. You need to have trading system that of course has higher profitability than 50% so you get more profitable trades than loses(with the same risk/reward).
So to get the same profit of $100 you are risking A. without leverage $120,000 B. with 1:1000 leverage you risk just $1,000
Risk because quite often some of the brokers just disappear with your money.
If I had 100,000 I would split it to many small accounts at different brokers, different strategies, different pairs to diversify the risk.
High leverage always dangerous so it would be better if we use it in our demo account .in live account we always have to use minimum leverage for avoiding risk, actually leverage allows an investor to grow his market exposure to a level that exceeds the initial investments.
Leverage is useful as it increase the trading margin and when you trade with the amount more then you deposit it makes profit accordingly even a small fluctuation in price could lead to more Profit. On the other end it increases the risk criteria of a trader as a small low in the market price could lead to a huge lose
It depends on your trading balance. if you have sufficient balance , then you can make profit very rapidly by using high leverage. But if not, it is better to trade with small leverage for avoiding risk.
The leverage is an important financial tool which an investor should consider when choosing a broker , it allows an investor to grow his market exposure to a level that exceeds the initial investments. We can make profit very rapidly by using leverage if we have real money managing plan.
Mohammadi posted: It depends on your trading balance. if you have sufficient balance , then you can make profit very rapidly by using high leverage. But if not, it is better to trade with small leverage for avoiding risk.
It is quote opposite
If you have million dollars you can trade 1 lot EURUSD without leverage If you have like 1,000 you must use leverage.
Leverage is very important as it allows investor to exceed his limits.He can trade in more than what he has in his account.It is an important factor that should be kept in mind before opening trading account with any broker.
Leverage is useful and is an important aspect of trading. I prefer moderate leverage over very high or very low leverage. Whenever I will go for high leverage I will keep any eye on my losses. Every day is a new day in trading and you never know where the market will take you. You might have started with losses and end up in gains and vice-versa. Once you attain a good trading strategy and style, high leverage can yield great profits for you. So I guess more experience and expertise you gain, the higher leverage you can set on your trading.
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Leverage creates additional risk and loss exposure. Before you decide to trade foreign exchange, carefully consider your investment objectives, experience level, and risk tolerance.
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