High leverage = High risk?
Member Since Oct 29, 2020
53 posts
Mar 01, 2021 at 08:22
LyudmilLukanov posted:But it is so darn appealing I say :) why not risk some
New traders should not use high leverage in trading. Traders need to control and minimize the risk for using high leverage.
Member Since Oct 29, 2020
53 posts
Mar 01, 2021 at 08:22
marco_mmbiz posted:But I won’t be owing anything more than my initial credit right? Or am I wrong here...thanks for your replyunsightlydray posted:78678676 posted:Debt?? I don’t intend to take up a loan for trading, as wrongly (I think) suggested by a friend!
A higher leverage is way too risky, specially for a newbie who can end up getting himself trapped in a bad debt.
Actually 'leverage' just means that you'll get a 'credit' from a bank or liquidity provider of the broker. A max. account leverage of 1:500 means that you can trade with a maximum of 500k per trade (!) while you'll only throw in 1k of your own money. But if you'll lose 2k in that trade, where does the other 1k come from then? Right, it comes from your deposits (and that's how can get into debt). Most professional brokers have a negative balance stop out. But the higher your leverage the higher the chance you'll get to this stop out.
Member Since Jul 20, 2019
373 posts
Mar 02, 2021 at 12:17
unsightlydray posted:marco_mmbiz posted:But I won’t be owing anything more than my initial credit right? Or am I wrong here...thanks for your replyunsightlydray posted:78678676 posted:Debt?? I don’t intend to take up a loan for trading, as wrongly (I think) suggested by a friend!
A higher leverage is way too risky, specially for a newbie who can end up getting himself trapped in a bad debt.
Actually 'leverage' just means that you'll get a 'credit' from a bank or liquidity provider of the broker. A max. account leverage of 1:500 means that you can trade with a maximum of 500k per trade (!) while you'll only throw in 1k of your own money. But if you'll lose 2k in that trade, where does the other 1k come from then? Right, it comes from your deposits (and that's how can get into debt). Most professional brokers have a negative balance stop out. But the higher your leverage the higher the chance you'll get to this stop out.
Just read my post again.
Here's also an interesting read for you: https://www.earnforex.com/guides/can-forex-trading-put-you-in-debt/
patience is the key
Member Since Oct 26, 2020
29 posts
Mar 03, 2021 at 09:37
Let the traders make their own decisions. Trading is not about following the footprints of other traders. It is about paving your own way to reach success and that can be with or without leverage.
Member Since Oct 29, 2020
53 posts
Mar 04, 2021 at 08:23
marco_mmbiz posted:Thanks, I’ll go through it.unsightlydray posted:marco_mmbiz posted:But I won’t be owing anything more than my initial credit right? Or am I wrong here...thanks for your replyunsightlydray posted:78678676 posted:Debt?? I don’t intend to take up a loan for trading, as wrongly (I think) suggested by a friend!
A higher leverage is way too risky, specially for a newbie who can end up getting himself trapped in a bad debt.
Actually 'leverage' just means that you'll get a 'credit' from a bank or liquidity provider of the broker. A max. account leverage of 1:500 means that you can trade with a maximum of 500k per trade (!) while you'll only throw in 1k of your own money. But if you'll lose 2k in that trade, where does the other 1k come from then? Right, it comes from your deposits (and that's how can get into debt). Most professional brokers have a negative balance stop out. But the higher your leverage the higher the chance you'll get to this stop out.
Just read my post again.
Here's also an interesting read for you: https://www.earnforex.com/guides/can-forex-trading-put-you-in-debt/
Member Since Jul 09, 2020
4 posts
Mar 04, 2021 at 09:27
Choosing the right leverage for your trades is not a one size fits all circumstance. It depends on how much capital you have and how much you are willing to risk. As a beginner, instead of looking for the best leverage you can use, you must focus on what you should know when you start forex trading.
Member Since Jun 22, 2020
5 posts
Mar 04, 2021 at 11:24
For me, leverage is the way of reducing the amount of trading capital that must be used. It also releases the trading capital for other trades.
Member Since Oct 29, 2020
53 posts
Mar 05, 2021 at 06:55
Paulbraighte posted:And won’t that include how much leverage to use ? :)
Choosing the right leverage for your trades is not a one size fits all circumstance. It depends on how much capital you have and how much you are willing to risk. As a beginner, instead of looking for the best leverage you can use, you must focus on what you should know when you start forex trading.
Member Since Jun 30, 2020
47 posts
Mar 05, 2021 at 13:09
@Garey I used to think that too but when I actually used leverage, it kind of increased my capital efficiency. It also works well during low volatility periods. I was recently trading with ib and I worked with some highly leveraged positions but the result was pretty good so there’s that. I think there is more to leverage and we can actually use it for our benefit. Just sharing my 2 bits here.
Member Since Oct 29, 2020
53 posts
Mar 08, 2021 at 07:06
Daniel993 posted:Yes, it is totally up to the skills of the trader, how leverage is used.
High leverage is considered a risk because the loss value is more than the invested capital, but it is also an advantage to use high leverage because the profit earn is doubled.
Member Since Oct 29, 2020
53 posts
Mar 09, 2021 at 06:50
AmDiab posted:Trading without analysing the market? That would be like a death sentence for the account :)
high leverage not high risk always if you know how to manage risk ,
because most of the time we trade with no analysis , as a result we become loser.
Member Since Oct 29, 2020
53 posts
Mar 09, 2021 at 06:51
BarronLucas posted:But using leverage with a proper market research and analysis would do us good right?
Using high leverage does have higher risks and possibilities of blowing up your account.
When a trader uses high leverage and losses in a trade the loss is higher as the leverage and would be difficult for the trader to invest in the next trade.
Member Since Dec 24, 2020
21 posts
Mar 10, 2021 at 10:19
ddarko3 posted:Have you ever lost a lot of money like this?unsightlydray posted:Technically leverage helps you to gain more but the problem with them is that you can also lose completely
As someone with just a few dollars extra to give trading a shot, would it be possible at all to gain anything without the use of leverage? And is it even wise to use up all of your own cash?
Member Since Oct 09, 2020
28 posts
Mar 11, 2021 at 06:52
Numero, It’s right that forex investments offer potential profits but at the same time, also have downside risk. Sometimes, you may lose more than the value of your transaction when trading on margin. But if you already have been in the market for some time and have learnt risk management, things can get easier for you. My first leverage ratio was 1:5 with oanda. I got an idea about using it and in my next trade, I increased the ratio to 1:50. It turned out to be a profitable trade later. Had I not taken the risk, I would have not made that much.
Member Since Oct 29, 2020
53 posts
Mar 11, 2021 at 07:07
That is exactly my thought. Without making calculated bold moves, making money can be near impossible in the forex market. Or any other financial market to think of it.
Member Since Oct 29, 2020
53 posts
Mar 11, 2021 at 07:08
mortanlais posted:I am sure there’ll be mixed responses for this. Some traders would have gained heavily while some would have lost it all, would ultimately depend upon every trader’s strategy used isn’t it?!ddarko3 posted:Have you ever lost a lot of money like this?unsightlydray posted:Technically leverage helps you to gain more but the problem with them is that you can also lose completely
As someone with just a few dollars extra to give trading a shot, would it be possible at all to gain anything without the use of leverage? And is it even wise to use up all of your own cash?
Mar 13, 2021 at 16:30
(edited Mar 13, 2021 at 16:30)
'High leverage does have higher risk involved but using high leverage also has benefits because the profit earned is higher than the invested capital in a trade.
But high leverages are mostly used by experienced traders that take risks and place accurate or profitable trades.'
But high leverages are mostly used by experienced traders that take risks and place accurate or profitable trades.'
Member Since Dec 11, 2020
19 posts
Mar 17, 2021 at 05:43
The market moves can be quite unpredictable. But if you won’t take risks, you won’t be able to make profits. If not high leverage, you can start with using low leverage and increase it with time. It is better not to take risks when you know what the clear result will be.
Member Since Dec 01, 2020
20 posts
Mar 18, 2021 at 09:53
No one wants to lose, right? But I don’t understand why traders refrain from analysing the market before making such bigger moves that result in nothing more than losses. Trading is a risky job and it must not be taken lightly. I have been into trading for the last few years but there hasn’t been any strategy that I applied directly on my live account. I demo trade with pepperstone every time I see profitable market conditions to use leverage. It’s a longer procedure but I’m in no hurry to lose :)
