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Leveragetrading

WHAT IS LEVERAGE IN FOREX? “Leverage” means using a small amount of your own money in order to control a much larger amount of money. Typically, you borrow the remaining amount through your broker. For example, say you want to control a $50,000 position. Your broker might put aside $500 of your own money and borrow the remainder. You now have control over the $50,000 with just $500 from your own account, so your leverage ratio is 100:1. Now, let’s say the $50,000 investment rises by $500, so the full position is now worth $50,500. If you were liable for the full $50,000 (representing a 1:1 ratio), this is only a 1% return on your investment. However, since you only put in $500 of your own capital, the $500 increase represents a 100% return on your investment – that’s way more exciting! Now, it’s important to understand that this cuts both ways. If you lost $500 instead of gaining $500, you would see a -100% return on your investment. Yikes! If you had a 1:1 ratio and put in the full $50,000 you would only see a -1% return. How Much Can You Leverage in Forex? Before you open an account with a broker, you’ll want to check the maximum leverage ratio that you’ll be able to use. The higher the ratio, the bigger your potential gains or losses. Brokers will usually offer 50:1, 100:1, 200:1, or 400:1 ratios. A typical ratio on a standard lot account is 100:1, and a mini lot account will often offer a 200:1 ratio. If you start trading at 400:1, be wary of using small deposits to control large capital, as these can disappear quickly with the volatility of large sums. Lower leverage keeps you safer from mistakes, while higher leverage could bring in higher rewards. How Leverage Affects Your Trading ✅ As we’ve seen, leverage is a powerful tool that can help you win big in the forex market. You can use less capital to control greater positions, giving you flexibility and amplifying your profits. However, it can just as easily amplify your losses. At very high levels, leverage starts to damage your odds of success. Transaction costs represent a higher percentage of your margin the greater your position is. This means that transaction costs already put you at a disadvantage with excessively high leverage.
BITSTAMP:BTCUSDEducation
by SignalProvider
3
A time to be sketch on Bitcoin.All thought we are still in the depths of a bear market there still could be small pumps like to $20200 possibly very soon because we are in the middle of a huge decending triangle right now and the four hour MACD is creeping up bit by bit while it has been going sideways around the $18600 area. I said weeks ago how this price would be the next support. Because it is the bottom of the triangle. I highly likely see a pump to $20200ish then another dump back to $18600. Or just back to $18,600 now then it's going further south. If none of this works out and it breaks $20200 and keeps going well this was the bottom. So we will see what happens. Let's find out and learn from the historic moment in Bitcoin History. Cheers to the good trades!! 👍
BITSTAMP:BTCUSD
by EliteSignals
2
Bitcoin Cash Huge Potential on 10X (1600%+)Here is Bitcoin Cash (BCHUSD), this is the same chart we shared a few weeks back. We are hitting the gas on this one as we see potential for massive growth. After the retrace that ended 13-July (Full moon), BCHUSD is now ready to grow. We are active with 10X of leverage. Disclaimer: Not for beginner, for experienced traders only. Leveraged trading is high risk and can result in liquidation. This is not financial advice. We are wishing huge profits and good luck. Namaste.
BITMEX:BCHUSD.PLong
by AlanSantana
9
How much leverage should I be using?Understanding how to trade forex requires detailed knowledge about economies, political situations, all the individual countries, global macroeconomics, the impact of volatility, it goes on and on. But the reality of the situation is this isn't what makes most new traders fail. What makes most traders fail isn't the lack of knowledge or understanding of what it is they're actually trading. It's the lack of knowledge and understanding on leverage. As most of us would have heard, there is very obvious statistic out there that majority of retail traders fail. Now, most people will see this as a lack of competence and just purely not willing to put in the effort to be successful. But a lot of the time it is people not understanding the risk their undertaking and what it is they're actually doing with their money when they enter the market. It really highlights this when traders come to a firm like ours, and question leverage or they have so many questions about leverage that even though they've been trading for three to four years, they still don't fully understand the actual risks that are at hand when they are opening certain positions that they really can't afford to open. Today I wanted to jump into leverage. Let's really dive into depth what it is, why we have it, how we can use it. Then, finally touch on what is the right amount of leverage for you as a trader. So you can be exponential in maximizing your profits, but also ensuring that you're not damaging yourself long term. LEVERAGE RISK Firstly, I think it's important for us to have a look into leverage. Leverage is the process in which an investor or trader borrows capital in order to invest or purchase something. Typically we borrow capital from a broker and we buy into positions with money that we didn't have in order to be able to gain more profit from those positions. Most traders are blindsided and constantly think the more money I have, the more profit I can make, which is true, but they fail to recognize that the more risk it carries. Carrying higher leverage is an exponential increase in risk. Most brokers out there will probably offer you something like 50:1, 100:1 or even 500:1 leverage. This giving you a buying power of 50, 100 or even 500 times whatever the amount of money you have in your account. Which means a trader with just $100 in a brokerage account could open a position with $50,000 in the market. Now, while that may sound advertising, believe me, that's a trap and we're going to chat about that today. HIGH LEVERAGE EXAMPLE So let's dive into an example. Let's imagine we have a trader who has a $10,000 account. They decide to use 100:1 leverage, which now means with that $10,000 cash, they can trade up to $1,000,000 in the forex market. Let's assume that the trader opened a position with the full available capital which would relate to 10 lots, and they opened the position on a currency with the USD being the quote currency. That means that each PIP movement is equal to $100. So for a simple equation, if they were to enter a trade and that trade went against them by 50 pips, they would have lost 50% of their account because that 50 pips would have been equal to $5000. So in one wrong trade they lost 50% of their account. So many people in this industry is so quick to look at what the realized gains could be, but they rather tend to ignore the actual risks that come with that. If you don't have sufficient evidence that your investment strategy is going to provide consistent and stable gains long term, do not look to trade with higher leverage, as you will be gambling and it is extremely risky. LOW LEVERAGE EXAMPLE Now let's use the same example, but in a lower leverage situation. The trader has $10,000 cash only this time he is trading on an account with 5:1 leverage, resulting in a buying power of $50,000. This means on a pair with the US dollar as the base currency that you can open a maximum size of 0.5 lots. Let's go ahead and take the exact same trade, only this time with a 0.5 lots, each pip is equal to $5. Should the investment or trade fall the same 50 pips this time the trader will only lose $250, which is a mere 2.5%. Same trade, different leverage, one lost 50% the other lost 2.5%. It is a common trick out there that traders feel they require more leverage to really make money in the market. It's not true. Yes, it can help you get more profits from those smaller moves. Yes, it is really beneficial if you have a proven strategy. If you are still coming to grips with trading or you're fairly new and you haven't achieved consistency and profitability yet, focus on lower leverage. What it will actually do is make you focus on long term goals. Focus on the process this giving you more sustainability in the market and therefore more maturity. CHOOSE THE RIGHT LEVERAGE Choosing the right leverage is a very important step in Forex trading. You can be tapered in by fancy numbers and big brokers trying to get you in, Or, you can realistically dive into what it is you actually need and what's going to benefit you more in the future. There's no right answer to how much leverage you need each strategy in each individual require different things, but what I will do is share some tips and some knowledge on how to choose the right one that benefits you. 1. Always try and maintain the lowest leverage you possibly can for your strategy. If you manage to pull it right the way into where you can only just open the positions on the risk you have allowed yourself, and you can't open more than, lets say three positions, what you actually do is limit yourself to focus on only the good positions. You've prevented over trading from occurring and you can really focus on your risk management. 2. When you open positions or you talk about opening positions instead of going to people saying, "yes, I opened 0.35 lots." Use the actual dollar value when you open a 0.35 lot position. Instead, say "I opened a $35,000 position." Talking in that language that you have placed your bets with $100,000 or $1,000,000 will make you realize how much risk you're actually exposing yourself to and the capacity of what it is you are trading. 3. Limit your overall risk, at absolute Max, I risk 0.25%. This allows me to go into large drawdowns and it not be an issue. I can still manage it accordingly in it actually keeps me nice and calm and focused on the analysis rather than the running profit and loss. The bottom line is selecting the right Forex leverage depends on the traders experienced risk tolerance and comfort when operating in the market. You want to ensure that it's not out there to harm you, but rather it's there to help. You do not want be trying to get really high leverage so you can make large profits, when you know realistically, there is no evidence to prove that you will make those high profits. Start small, gain consistency, gain exposure and gain experience, and then you can start looking to expand your equity and buying power.
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FOREXCOM:XAUUSDEducation
by the5erstrading
42
When you should use leverage in your trades?When you should use leverage in your trades? I’m going to answer this question, but first, we have to mention two other questions to be answered. Q1: What is a reasonable trade? An order in which the entry point, stop loss, and take profit are already pre-defined based on a good return strategy or rules. Q2: What is money management? Money management is to determine the percentage of risk on the total balance in each order and to know what your position size will be and how much your potential loss will be. We need to do some calculations to answer the first question. Let’s suppose your account balance is $100 and the maximum risk on your balance for each trade is 5%. This means that on a reasonable trade, your loss will be $5 at most. Besides that, you have a good trading opportunity with an entry point at $10, stop loss at $9, and profit point at $12, i.e. 10% potential risk and 20% potential reward for the position. Since we cannot lose more than $5 of our balance, we need a position size where the potential loss will not exceed $5. Which we can calculate with this formula: (Max risk on balance / position risk * 100). Which would be $50 in our case.  This means that we are only allowed to include $50 out of $100 in this trade; this would be $5 after a 10% loss.  Everything is normal and we can afford it, so we will do the trade. Now, let’s increase the max risk on balance to 20%. It means our potential loss would be at most $20. By doing the same calculations considering the same reasonable trade with 10% risk, our position size will be $200 while we do not have more than $100, so where do we get $200 from?! Yep! Leverage would help you in this case. So benevolent, isn’t it?  In this case, your leverage would be 2 and you can open a $200 position, but don’t forget you increased your account risk from 5% to 20% already. Note that the risk will be applied to your real asset. If your balance is $100 and the leverage is 10, the exchange will give you about $1000 to buy or sell. While the 5% of $100 is $5, the 5% of $1000 would be $50, which is 50% of your real asset. So calculating the risk on leverage balance is practically meaningless! What if we had 10 orders simultaneously? It means $100 will be split between 10 orders. For ease of calculation, we consider every 10 trades to be the same as what we had above, while each trade would have 10% of $100. In these conditions, each trade would again have a $50 position, but leverage will be 5! Having said that, we can conclude that leverage alone is meaningless and finds meaning alongside reasonable trade opportunities and money management. In the above explanations, for the ease of calculation and context understanding, I used rand but not necessarily correct values. For example, a risk ratio of 5% on balance is a really high risk or in the example of 10 trades at once, it is wrong to consider your balance as $100 at the start of each trade. In the worst-case scenario, you should deduct the loss of the previous trade from your balance for the next trade. From the link below, you can access the tool I prepared to calculate the position details. bit.ly Feel free to give your constructive feedback.
Education
by bhnmzm
2
This channel is STILL working and keeping me SAFE I was hesitant last week to share this and wasn't sure enough about this working for longer time frames. BUT as you can see this has been really good for me the last 2 weeks. Same with this morning as my reference to keep my mind LEVEL and stay away from emotions and Drama. I HOPE it can help someone else make and KEEP what gren they see in these times of #BearMarkets and #Winter ... Trade safely Hustlers ... Ive used THIS channel to reference OTHER things im trading and its been CRAZY accurate even for other charts when im not sure about a move or breakout i go back and see what ADA on this chart is doing ( 1 tab click away) and its SAVED me several times this last two weeks from making BAD emotional and or #fomo moves. Until further notice its STILL helping .
by rarebreed29
BTCUSDT - added 25% to my long 75x leveraged positionI entered my position @ 43600. I was expecting more upside end of week on Friday. Yet the market played out completely opposite. I usually trade with no more than 5% of my account and out of the 5% the first position is not more than 15% of that which brings the overall exposure on trade nr.1 at 0.75%. So overall now i am down 1.5%. I added 25% to my long @ 42600. Currently I am -32% on my leveraged position. I finally decided to limit my exposure with a stop @ 41600, limiting my losses to 60%-70% of my 5% allocation.
Long
by Scribes
3
Finding Effective LeverageKnowing the link between leverage and equity is important. Now, you have to decide how much you are willing to risk and set your trading capital accordingly. To find effective leverage, consider two inputs: trade size and equity. Use effective leverage of 10:1 or lower. Only risk 10% or less of your account balance at any given time. Add the cash value of your entire exposure to the market (all your trades), and never let that amount exceed 10 times your equity. To calculate leverage of a single trade, divide your trade size by your account equity.
UEducation
by francisrv