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What is mean by Leverage in trading?


kiranchandra

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@Gaban, yeah. Without leverage, Forex may not have been this interesting. I really doubt the possibility of people making it in Forex if there were no leverage because their little capital especially for the poor traders would have been valueless and a lot of them would get frustrated out of business.

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I think leverage is a process by which the broker gives the investor the liberty to invest in a wide scale with less money. It is very risky. As with a little adverse swing you are liable to lose your total money before tasting the profit. Some brokers offer 1:1000 leverage. It means one every $1 real money you can trade with $1000 in investment. That means with as little as -.001% swing of the market you are about to lose your $1 investment. 

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  • 4 weeks later...

I learnt there are countries which have some kinda laws restricting the amount of leverage a trader can take at a particular time. I think that's a great one because a lot of newbies would want to see only the positive nature of the leverage system, believing more in the fact that they can make more profit with it rather than the reverse implications of trading with high leverage.

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  • 2 weeks later...

I currently prefer to use leverage 1:1000, because leverage is in accordance with my trading strategy. In choosing the leverage we have to be more careful because of leverage can backfire for our trading. Moreover, if we have a poor trading psychology, it is highly recommended to use a little leverage.

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Leverage will help us to trade with small amount. If we use high leverage, required margin per order will be smaller and if we use low leverage, required margin per order will be bigger. I just use leverage 1:500 from TenkoFx.

 

agree that leverage is like that, with the use of substantial leverage, the margin required will be smaller in contrast to small leverage. For that we have to be careful in using leverage. if the required margin is small then we are still left a lot of capital so that we can trade with overlot.

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Good use of leverage is important and not just trading with a high leverage for the love of profits. It is a way to make profit from Forex with little capital but when abused, can also be a way to lose with little capital. Since it a face lift to our trading capital, it is wise to understand the implications of using a high one when not necessary.

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Good use of leverage is important and not just trading with a high leverage for the love of profits. It is a way to make profit from Forex with little capital but when abused, can also be a way to lose with little capital. Since it a face lift to our trading capital, it is wise to understand the implications of using a high one when not necessary.

 

therefore, we must be careful in choosing the leverage because leverage we choose can  bring greed in our trading. With a large trading leverage, the margin required is very small, so if we have a poor trading psychology then we can trade with overlot.

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leverage enabling traders to start trading with small capital. if traders choose to use 1:100 leverage. mean every 1 lot value count 100 times. if traders use 0.01 lot in trading, its same if they are trade with 1 lot value. however, leverage contain high degree of risk. high leverage mean traders deal with high loss too.

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leverage enabling traders to start trading with small capital. if traders choose to use 1:100 leverage. mean every 1 lot value count 100 times. if traders use 0.01 lot in trading, its same if they are trade with 1 lot value. however, leverage contain high degree of risk. high leverage mean traders deal with high loss too.

 

Yes, leverage is very helpful in forex, but unfortunately, not all traders can use leverage as well as possible. And forex trading, i try to maximize leverage 1:500 from TenkoFx. For lot, i just use small lot size for trading and try to make my trading result be consistent in forex.

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@gaban, sure. Leverage is the reason small traders still trade, it is also the reason some are greedy so it is seen as a two edged sword that can make or mar. What the trader needs to know is the effect of whatever leverage he chooses on his trades. It is therefore necessary that when choosing one, adequate care should be taken after understanding how leverage work.

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you should think carefully with  leverage you'll used. because the effect is very big leverage for your trading. With the leverage you can get a lot of advantages, but you will also get a lot of losses, it would be well before applying leverage is chosen you must  first test on a demo account.

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  • 2 weeks later...

That is where some newbies really fail because they fail to understand the way leverage work. They see it as way to make good profit from Forex and it rarely matters to them that they already have small capital. Trading with small capital gives you a chance to earn well with the help of a leverage system.

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leverage for trading must be utilized properly, due to the leverage it with a small capital we can trade like using big leverage. but can also be detrimental to leverage our trading because then we have to be careful with leverage we choose

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leverage for trading must be utilized properly, due to the leverage it with a small capital we can trade like using big leverage. but can also be detrimental to leverage our trading because then we have to be careful with leverage we choose

 

Absolutely, leverage which provided by broker should be maximized as well as possible. In TenkoFx, i can get leverage up to 1:500 and i try to maximize that leverage for trading in forex. Although it's not as big as in other brokers, but it's enough for me.

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leverage mean that traders has opportunity to make money even though they use small capital. no leverage mean traders should trade with high amount of capital. while with leverage, traders can open micro account. which it enabling them to spend little amount of capital to trade.

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leverage is very beneficial for traders because of the leverage that we can trade with small capital. for that, we should be able to choose the appropriate leverage our trading needs. so that we can maximize the leverage that we choose either

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leverage mean that traders has advantage to trade with small capital. without leverage, traders should start trading with high amount of capital. no micro account available which force traders to trade on standard account. one advantage by trade on forex is leverage indeed. while it not available on stock or commodities trading. 

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yes, we are lucky to get leverage because without leverage we have to trade with large capital. to it, must make the most leverage from the broker. and in choosing leverage also have to be careful because of the substantial leverage could make us greedy trader

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