I strongly suggest you go to babypips.com and read the free forex course over there, it will answer many of the basic questions, including all about leverage.
What u shuld know about leverage is dat,
1.The higher ur leverage, the lower the margin requirement for a particular lot size/volume and the higher ur margin level. (note i mean here that 500:1 is higher than 200:1 according to my own athematics)So if u are using a higher leverage it means that u will be able to place more trades or take higher lot size even with small account size. However note it that under ongoing trading situation if u are makin profit, it will be higher and if u are making losses, the higher it will also be.
In relation to ur margin level, higher leverage makes ur margin level higher, so if u are very good at strict account management e.g not overtrading/not trading too large lots it means that you can never have margin call or ur broker can never close ur positions under loosing situations when u perhaps hope they will reverse. e.g i operate with alpari, according to their policy 4 live traders, when ur margin level falls to 20%, they close some or all of ur loosing trades or give u a margin call, so to evade this i use 500:1 and infact my margin level has not fallen below 1400% at any time, however this has worked well 4 me because i am very strict with account management, i just dont overtrade.
I always advice traders to ensure they keep their equity growing and not account balance. Some traders will keep fattening their balance and equity will be suffering. This is very stupid of them !
2. As regards, lower leverages, the lower ur leverage, the..........................................................................................................................i am not a parrot , u can complete all dis urself, just opposite of all i have said.
----"Do not see the forex business as a get rich quickly business, those who survive it most on longer term are those who take it as a get rich slowly business". OKAY ! So get ur orientation right before going into live trading.
------- SUCCESS WISHES''.
know thy edge and abide by it ! 4 in it shall thou be successful !
