I think leverage varies according to the brokers. A 100:1 leverage for instance would allow you to open a 1 lot position with just $1000. I have been following this approach with both turnkeyforex and oanda but when I tried this with my new account with forex.com, this wasn’t the case.
I believe that leverage is a function of risk and this is the reason why most market makers offer it. If the account is properly managed, the risk will also be manageable. You have to be really very careful when you are using leverage.
I prefer applying small amounts of leverage to each of my trades as it leaves more room for trades with a wider stop loss to avoid a higher loss of capital. Remember that a highly leveraged trade can deplete your account quickly if it goes against you.
Higher leverage is very risky but how much leverage I will use usually depends on the investment. If I want to select low leverage with a small deposit, it will be very difficult for me. I have to select leverage with a good deposit.
You don’t have to be afraid of using leverage. Use trailing stops to reduce your losses when a trade goes in the wrong direction. Just see to it that your broker allows using different stops. And this is not the only advantage of these stops that I see. It so much reduces the emotion of trading and surely results in better trading decision-making.
LukeRachel posted: Higher leverage is very risky but how much leverage I will use usually depends on the investment. If I want to select low leverage with a small deposit, it will be very difficult for me. I have to select leverage with a good deposit.
Wouldn’t higher leverage with a higher deposit entail an even higher risk :)
HIGH RISK WARNING: Foreign exchange trading carries a high level of risk that may not be suitable for all investors.
Leverage creates additional risk and loss exposure. Before you decide to trade foreign exchange, carefully consider your investment objectives, experience level, and risk tolerance.
You could lose some or all of your initial investment. Do not invest money that you cannot afford to lose. Educate yourself on the risks associated with foreign exchange trading, and seek advice from an independent financial or tax advisor if you have any questions.
Any data and information is provided 'as is' solely for informational purposes, and is not intended for trading purposes or advice.
Past performance is not indicative of future results.