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What is mean by Leverage in trading?


kiranchandra

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leverage is margin collateral. If we invest 1 million if leverage is 1:100 then our capital will be 100 times more than we deposited. Therefore, we must be careful in choosing the leverage that we will use. Because of the greater leverage that we select, the greater the risk that we face.

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leverage enabling traders to trade with small capital which usually require to $100 per standard lot value. leverage enabling traders can use micro lot which have $1 value. so, traders can trade $1 equal to trade with $100. that if I am not wrong in calculation.

in forex trading we know that this is a good opportunity to use the amount of leverage in the trade because after this trade had to use especially with the leverage we use small capital then we must use the leverage in this trade

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when traders have small capital in trading account, better they are use 1:100 standard leverage ratio. which enabling them to trade with smallest lot size. traders can choose to use high leverage but it won't make them survive long when they are have small capital.

when we have a little capital in the trade I am sure we will need a better leverage in trade because without the leverage we need such a large capital in forex trading and I may not be able to participate in forex trading if such

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Leverage is the ratio of the amount used in a transaction to the required security deposit. We should be carefull when choosing leverage to trade in forex. We should understand that if we use higher leverage, the risk also will be higher.

 

 

yes, I agree with you, we should be careful in choosing leverage. think carefully before choosing leverage. Laverage large  could be detrimental for our trading. Moreover, if we do not have good money management. With higher leverage will make us become  greedy trader. As a result, our accounts will not last long.

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  • 2 months later...

I see leverage system as the main reason poor people are in Forex. With leverage, a trader can trade with small amount and still make reasonable profits. It is like, if you are trading with 10 using a leverage of 1:100, it makes it look as if you are trading with 100*10 which is $1000.

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  • 3 weeks later...

leverage is s system which increase the chance to get high profit though traders have small capital. higher the ratio, mean minimum lot size will be increase very high. I am personally prefer to use standard 1:100 leverage ratio. it safer and doesn't cost high margin if we choose to trade with minimum lot size.

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this time I prefer to use the leverage of 1:1000 instaforex. I think this is suited to leverage my trading needs. with leverage 1:1000 will make us the opportunity to earn more profit will be wide open. utilize  leverage great if we could use it well, it will be very mengutungkan for our trading.

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Leverage is expressed as a ratio and is based on the margin requirements imposed by your broker.

 

For example, if your broker requires you to maintain a minimum 2% margin in your account, this means that you must have at least 2% of the total value of an intended trade available as cash in your account, before you can proceed with the order. Expressed as a ratio, 2% margin is equivalent to a 50:1 leverage ratio (1 divided by 50 = 0.2 or 2%). but now, i used 1 : 500 in FBS

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since leverage available, make forex business become lucrative. if in stock market we should trade with standard contract because no leverage, in forex we can start trading with small or micro contract. which enabling us to spend little capital to start trading.

 

of course, the leverage we can trade with small capital. For example, if we use the leverage of 1:1000, then we can trade with a capital of 1000 times that of our capital. And it is very profitable. But it can also be very large leverage detrimental to our trading.

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Leverage is one benefit which is given to us by the broker through which we can raise our amount for trading in a way, we can set high leverage and reduce it according to our mind/needs, if you want me to advise I think we should not go for too high leverages as setting high leverages is very risky and can result in loss so we should use a bit lower leverages for instance.

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leverage as a boomerang for our trading. because of the leverage that we choose then it could be beneficial or detrimental to our trading. with leverage the greater the risk that we face will be greater as well. because it means that our margins will be smaller so that it will tempt us to trade with a lot more.

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Leverage will help us when trading in forex, although we only use small amount as capital. We must try to maximize leverage as well as possible. Leverage is a double edged sword. And the matter is not how big leverage we use for trading, but how can we maximize leverage which we use for trading. TenkoFX just offers leverage up to 1:500, but it's not a problem for me because i'm still be able to trade comfortably in this broker.

 

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leverage help traders to start trading with little capital. have chance use big lot size and it usually make traders greedy. though they are use small capital in trading. the best leverage ratio is 1:100. it enabling traders to trade with 1 cent or 10 cent lot value. depend on brokers rules regarding with leverage and minimum lot value.

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