`Hi all
Seems I am not getting something right with leverage. Could someone knowledgeable please help...
If I am trading with a leverage of 1:1000 and trade 0.1 lots with 1,000 USD in my account ...
or
trading leverage of 1:2 and a trade of 0.1 lots with 10,000 USD in my account what difference does it make ?
Yesterday I notice in a trade with a demo account with 1:1000 leverage and two long trades one with 0.25 lots and the other with 0.5 lots that the ratio is not the same. What I mean is that although I expected the 0.5 lot trade to increase double the other 0.25 lot trade, this didn't happen. For example when the 0.5 trade would go from 10 USD profit to 16 USD profit, the 0.25 trade was at 2 USD profit would go to about 3 USD profit. This happened several times when the market was jumping up and down. Basically whenever it was against me...such as when the losing trade was near zero, the ratio of drop of the losing trade was more than when the market was going for me.
As far as I knew, leverage affects how much you can have in your account before you get a margin call. Therefore I fail to see how having a high leverage can be a disadvantage.....Why not trade with 1:1000 leverage and invest 1 dollar (1000 USD) instead of 1:1 and invest and invest 1000 USD ? Can someone please explain....
(I have heard that when the market goes against you you lose more when you have a high leverage.....what does that mean?)
thanks
Seems I am not getting something right with leverage. Could someone knowledgeable please help...
If I am trading with a leverage of 1:1000 and trade 0.1 lots with 1,000 USD in my account ...
or
trading leverage of 1:2 and a trade of 0.1 lots with 10,000 USD in my account what difference does it make ?
Yesterday I notice in a trade with a demo account with 1:1000 leverage and two long trades one with 0.25 lots and the other with 0.5 lots that the ratio is not the same. What I mean is that although I expected the 0.5 lot trade to increase double the other 0.25 lot trade, this didn't happen. For example when the 0.5 trade would go from 10 USD profit to 16 USD profit, the 0.25 trade was at 2 USD profit would go to about 3 USD profit. This happened several times when the market was jumping up and down. Basically whenever it was against me...such as when the losing trade was near zero, the ratio of drop of the losing trade was more than when the market was going for me.
As far as I knew, leverage affects how much you can have in your account before you get a margin call. Therefore I fail to see how having a high leverage can be a disadvantage.....Why not trade with 1:1000 leverage and invest 1 dollar (1000 USD) instead of 1:1 and invest and invest 1000 USD ? Can someone please explain....
(I have heard that when the market goes against you you lose more when you have a high leverage.....what does that mean?)
thanks