I usually prefer to work with smaller trading lots as I have been working as a scalper. As a scalper, I prefer not to work with borrowed funds with the use of leverage. Even levered funds are associated with high trading risks. But yes, it is true that when a trader will need in urgent money he can take the benefits of this trading tool, leverage.
The leverage that the broker offers, is one thing. The leverage you use, it's another thing. If you are looking to trade like a pro, then trade unleverage, if you're looking to trade your own money, I would advice no more than 5:1 per trade.
If you have $1000 in your account, and your broker gives you 1:100 leverage, then employing all of the leverage you can make 1 lot transactions. However, most likely you will end up losing your money soon. If you trade with 0.1 lot size that means you borrow $10'000 from your broker. In this case your effective leverage is borrowed money divided by own money. That is in this case approximately, but not exactly 10'000/1000 equalling to 1:10
You need to know what you are doing, and practise with a tiny risk.
High,but sparingly used leverage means that you have to deposit less money.
45656 posted: I usually prefer to work with smaller trading lots as I have been working as a scalper. As a scalper, I prefer not to work with borrowed funds with the use of leverage. Even levered funds are associated with high trading risks. But yes, it is true that when a trader will need in urgent money he can take the benefits of this trading tool, leverage.
Tell more about your lot sizing. In scalping I was using 1 microlot for each $100, broker's leverage was 1:400.
For higher free margin higher leverage is required. Especially, if someone is using a grid or scalping strategy with low account balance, then high leverage is required. 1:500 should be sufficient to handle such scenarios.
But if your account balance is very high, then naturally your leverage will reduce since no bank or broker will offer such leverage and hence, leverage is question only for retail traders.
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