To use chat, please login.
Back to contacts

Low leverage is dangerous, why?

Adelgrepling (Adelgrepling)
Dec 17 2017 at 08:22
13 postów
togr posted:
JacoAF posted:
Interesting... However, any form of leveraging can be dangerous if you have no clue how to apply proper risk management on your portfolio. High leverage (e.g. more than 200) is very dangerous to NEW traders, who tend to place more trades (because each trade requires less margin). New traders also are less disciplined in using correct stop-loss and take-profit levels, which could result in holding onto multiple high-leveraged losing trades for too long, resulting in blown accounts very quickly.

I think you have a valid point if you are an experienced trader with a solid proven trading system. It makes sense to use high-leveraged accounts when a proven risk management strategy is applied.

But I would not advise any new trader to open a high leverage account (e.g. 1:500) on their first attempt at trading, while they are still very inexperienced in terms of risk and money management, solid technical and fundamental analysis as well as being able to handle the emotional stress associated with trading, especially manual trading.

Anyway, very interesting post indeed! 😄


Well even newbie trader could work with high leverage using fixed stop losses and lets say max XXX trades od size of YYY on account of ZZZ balance. Well ANY even newbie trader should have trading plan including position sizing based on leverage:)



Do you recommend me to work with high leverage?

togr (togr)
May 14 2018 at 13:43
4862 postów
Adelgrepling posted:
togr posted:
JacoAF posted:
Interesting... However, any form of leveraging can be dangerous if you have no clue how to apply proper risk management on your portfolio. High leverage (e.g. more than 200) is very dangerous to NEW traders, who tend to place more trades (because each trade requires less margin). New traders also are less disciplined in using correct stop-loss and take-profit levels, which could result in holding onto multiple high-leveraged losing trades for too long, resulting in blown accounts very quickly.

I think you have a valid point if you are an experienced trader with a solid proven trading system. It makes sense to use high-leveraged accounts when a proven risk management strategy is applied.

But I would not advise any new trader to open a high leverage account (e.g. 1:500) on their first attempt at trading, while they are still very inexperienced in terms of risk and money management, solid technical and fundamental analysis as well as being able to handle the emotional stress associated with trading, especially manual trading.

Anyway, very interesting post indeed! 😄


Well even newbie trader could work with high leverage using fixed stop losses and lets say max XXX trades od size of YYY on account of ZZZ balance. Well ANY even newbie trader should have trading plan including position sizing based on leverage:)



Do you recommend me to work with high leverage?


That depends if you know how to control the risk

BillyBigNose
Jun 27 2018 at 06:21
13 postów
In a way leverage is almost irrelevant to risk. Bad traders will lose money on a small leverage account or a larger leverage. It does not solve the problem of risk management. If anything it gives a false sense of security

togr (togr)
Jun 27 2018 at 10:08
4862 postów
BillyBigNose posted:
In a way leverage is almost irrelevant to risk. Bad traders will lose money on a small leverage account or a larger leverage. It does not solve the problem of risk management. If anything it gives a false sense of security


Exactly. Low leverage in fact force traders to deposit more capital to be able to trade.
Bad traders - majority of them - will lose that capital at the end.

danielcabreja (danielcabreja)
Jun 27 2018 at 14:16
1 postów
More leverage = more buying power. Use with proper risk and you can 10x your profits. (The same way you can make money, you can lose money. You can 10x losses too)

togr (togr)
Jun 28 2018 at 06:32
4862 postów
danielcabreja posted:
More leverage = more buying power. Use with proper risk and you can 10x your profits. (The same way you can make money, you can lose money. You can 10x losses too)


Sure
first you have to have trading plan
when you are profitable you can scale up

Downtobusines
Jun 28 2018 at 13:32
10 postów
togr posted:

Sure
first you have to have trading plan
when you are profitable you can scale up


That is how it is done. Leverage large or small doesn't matter to most traders. Sensible ones will make money the bad ones will lose it all

togr (togr)
Jun 29 2018 at 06:51
4862 postów
Downtobusines posted:
togr posted:

Sure
first you have to have trading plan
when you are profitable you can scale up


That is how it is done. Leverage large or small doesn't matter to most traders. Sensible ones will make money the bad ones will lose it all

Wisely used leverage allows you to get the same profit with lower balance

Professional4X
Jul 14 2018 at 03:06
1189 postów
kebayamwamba posted:
with low leverage 99% of retail traders would never trade FX...



All US FX brokers have a hard limit of 1:50 for retail traders.

That's the maximum allowed, and it's been that way for quite some time.

To argue otherwise is completely pointless.


If it looks too good to be true, it's probably a scam! Let the buyer beware.
dianajs
Aug 21 2018 at 11:36
823 postów
When leverage is low the temptation to open positions with large lots is greater, which in turn leads to larger losses if or when the market develops against you.

Aby dodawać komentarze musisz być zalogowany.