Forex Factory (https://www.forexfactory.com/forum.php)
-   Rookie Talk (https://www.forexfactory.com/forumdisplay.php?f=56)
-   -   What leverage is best for a newbie? (https://www.forexfactory.com/showthread.php?t=652962)

MarkFxAnde Mar 30, 2017 12:09pm | Post# 1

What leverage is best for a newbie?
 
What leverage will you advice as a newbie trader to use? Do you think 1:1000 is too high for inexperience trader to use? Because I have been advised against using high leverage but again I thought it broker have provided it why wonít I use it. What you think?

Kanewilliams Mar 30, 2017 1:16pm | Post# 2

Well everybody has their own choice when it comes to Forex trading leverage as for me I do take 1:100 leverage , this will keep me enter the market with good margin , I donít like to trade with high leverage, even though it brings profit very rapidly , because high leverage always contains high risk.

NeilWagner Mar 30, 2017 1:44pm | Post# 3

I think for the newbie the best leverage is 1:20(maximum) attend no 200. Bu the traders who has 100% wining method in forex trading can use 1:500 leverage . 1:500 leverage will be best for those traders. But, one thing that, all leverage are good. It is only depends on trading strategies and trading plan of a trader.

srt Mar 30, 2017 5:03pm | Post# 4

If you drive a car with a max speed of 200 MPH is that car more dangerous than driving a car with a max speed of 80 MPH?

You're in control of the accelerator so only more dangerous if you step on it too hard. Are you in control of your actions or do you need someone else to put limits on for you?

If you lose $20 in 1 trade with a $100 account, will the account survive long based upon your trading style/performance ?

Calculate the dollars & forget about the leverage amount.

Just my opinion.

DwainUK Mar 31, 2017 2:17am | Post# 5

If you donít know how to use it than for gods sake donít. 1:1000 leverage is massive.Learn to win with small leverage and small lotsizes, and once you get good you can slowly increase leverage but still you have to know how to use. Cheers

UlliC Mar 31, 2017 8:56am | Post# 6

In the name of all thatís holy, please donít use 1:1000, as most possibly this adventure will end up with a massive disaster. Leverage work both ways, it either can help you if you know what you are doing or can kill your account in a matter of seconds if you are unexperienced. The best strategy would be to start low with 1:50 Ė max 1:100, gain some experience, and then and only then go to higher leverage if need be.

B00bies Mar 31, 2017 9:26am | Post# 7

If you mean ACTUALLY using the 1:1000 leverage full out then yes its not suitable for a beginner or anyone at all. This high leverage would be a pute gamble so if this is what you are going for then go ahead
only reason i can see such high leverage would make sense is if one is too afraid to deposit a big amount onto an forexbroker account. So instead of depositing 10.000usd with 1:100leverage you can deposit 1.000usd and still trade same lot sizes with the 1:1000leverage. If you go bust reload....

Cmoss Mar 31, 2017 9:43am | Post# 8

.... If you go bust reload....
you mean "when you go bust"


let's make sure we set the appropriate expectations

B00bies Mar 31, 2017 9:48am | Post# 9

{quote} you mean "when you go bust" let's make sure we set the appropriate expectations
Lets say if the very likely moment comes and you go bust, reload.

But in all seriousness. What i am saying is that you do have 10.000usd but only deposit 1.000 for your fund securities sake. So the trading itself is not influenced at all. You just make use of the leverage your brokers offers you in a "smart" way.

DwainUK Mar 31, 2017 10:46am | Post# 10

Well that is another strategy with small deposits to go full throttle but that is pure gambling of course and its really formula 1. Its not good for a newbie to ride a formula. Better start off with a small car

JensG Mar 31, 2017 11:31am | Post# 11

What leverage will you advice as a newbie trader to use? Do you think 1:1000 is too high for inexperience trader to use? Because I have been advised against using high leverage but again I thought it broker have provided it why wont I use it. What you think?
I would advise you to understand leverage first and then start to use it. The question clearly demonstrated that you do not understand leverage. 1:1000 is perhaps what your broker offers you (offered leverage) but that actually doesn't matter that much. The interesting question is your position size in relation to your account equity, in other words your "used margin" or your "used leverage". In the spirit of srts post: you don't have to go full throttle.
I would strongly advise to not think in leverage, margin or what not else but in "money per pip" and following that logic your next question is "how much should/do I want to risk per trade?" and there you have your position size. If your offered leverage allows you to trade that much (which is practically guaranteed at 1:1000) you're fine.

MarkFxAnde Apr 4, 2017 4:12am | Post# 12

As a trader first of all we the newcomers have to understand the basic of leverage ratio so that we can trade with particular money management to get rid of the margin call, for that we have to be very much experienced with the basic knowledge related to the Forex field.

available Apr 5, 2017 4:07pm | Post# 13

Well would you teach a kid handling a knife when its sharp or blunt? I think for newbies its better to start with the safest option and then when he understand both dangers and advantages he can move on taking higher risks

diana91 Apr 5, 2017 5:58pm | Post# 14

1:1.

Regards,

Diana.

dukas_trader Apr 6, 2017 6:44pm | Post# 15

for a newbie dont trade at starting, learn your trading platform, design strategies, do paper trading, then do demo trading some days for learning all from station in practice. then open real account and dont look at the leverage, trade only the smallest possible trading amount the broker offfers (best use cent accounts at start). train with this till your designed trading strategie works best for you, then increase trading amount until your manopeymanagerment is ok or you get emotion problems, then stop increasing until you can live with it

AngelInvest Apr 6, 2017 8:46pm | Post# 16

Honestly, start with low leverage. In many countries like US and Singapore they have a max leverage of 1:50 to protect traders from trading too much. Leverage is really a double edged sword and it is best to play things slow and steady.

nummularius Apr 7, 2017 3:56am | Post# 17

I did a number study a while back about leverage.

First off.. let's not focus too much on the potential profit, it gets people too excited...

Instead, let us focus on the potential loss...

With 1:1 leverage, or trading only what is in your account, it would take a movement of 10,000 pips against to blow your account. And you would lose all of it.

Mathematically it looks like this: Imagine a 10,000 unit account. Opening a 10,000 unit position would make each pip worth 1. No leverage means you can keep that position open until it is depleted one pip at a time. This would take a movement of 10,000 pips against, in a single direction.

With 10:1 leverage, or multiplying your account by 10, it takes a movement of 1000 pips against to blow your account.

With 50:1 leverage, or multiplying your account by 50, it takes a movement of 200 pips against...

And, with a 100:1 leverage position, or multiplying your account by 100, it only takes a movement of 100 pips against.

Look at this... Then look at what pair you are trading... When was the last time your currency pair moved that amount?

MitchellMcC Apr 11, 2017 3:00pm | Post# 18

The newcomers always consider high leverage as high risk. actually high leverage as long as trader still wisely using their margin and keep discipline with risk management , high leverage will help you to boosting opportunity , but many beginners they canít use leverage properly and having tendencies to become greedy and this will like as suicide at short time.

dukas_trader Apr 11, 2017 3:41pm | Post# 19

The newcomers always consider high leverage as high risk. actually high leverage as long as trader still wisely using their margin and keep discipline with risk management , high leverage will help you to boosting opportunity , but many beginners they cant use leverage properly and having tendencies to become greedy and this will like as suicide at short time.
when a stoploss is put in and it is executed to this price, the risk is not more then small leverage, if you calculate the lotsize correct. but you have the risk by fast moves, news, crash, gaps (weekend or daily in many futures or cfd),....
some of this risks are possible to avoid (like hold positions when market is closed), some you cant. so for a beginner (who should use this account for learn plattform or test his strategies) always use at beginning the most possible lowest trading amount. dont calculate any leverage, simple use lowest, thats enough for a newbie.

DarrenLehma Apr 11, 2017 5:28pm | Post# 20

The newcomers always should be careful before using leverage, because it always contains risk. If you know how to manage risk when trading, then it is possible to make profit very rapidly by using leverage, otherwise your condition could be as like short time suicide.


© Forex Factory