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Questions about leverage...

  • #41
  • Oct 4, 2018 4:05am Oct 4, 2018 4:05am
Quoting ZikriIrfan
{quote} Yes, I agree! I see, many brokers provide relatively low trading spread in the demo, but in the live service their trading spread is much high; even they increase the number during high voltage news session.
Well said. I think only the NDD Commission based brokers could provide the same conditions on demo and live. Because they earn only from the commissions, so it will be in their interest to keep the clients with fair conditions and transparency.
  • #42
  • Oct 5, 2018 6:16am Oct 5, 2018 6:16am
Quoting DwainUK
{quote} Well said. I think only the NDD Commission based brokers could provide the same conditions on demo and live. Because they earn only from the commissions, so it will be in their interest to keep the clients with fair conditions and transparency.
Mate, it’s really irritating experience when broker’s increase the trading spread during the crucial session. Isn’t?
  • #43
  • Oct 5, 2018 2:08pm Oct 5, 2018 2:08pm
Spreads is mainly considered as an important financial tool when choosing a broker , but when a broker increase their spreads level in crucial moment , it’s really difficult to tolerate.
  • #44
  • Oct 9, 2018 9:43am Oct 9, 2018 9:43am
Quoting ZikriIrfan
{quote} Mate, it’s really irritating experience when broker’s increase the trading spread during the crucial session. Isn’t?
Yea, it is irritating. But there is no way to avoid it. On all brokers with floating spreads, the spreads gets wider during the major news or high liquidity. This is how the market works. However it is better to have 0,4 pips spread almost all of the time and sometimes 1 pip (during the news), instead 1.5 fixed spread from Market Maker
  • #45
  • Oct 16, 2018 5:21pm Oct 16, 2018 5:21pm
Quoting DwainUK
{quote} Yea, it is irritating. But there is no way to avoid it. On all brokers with floating spreads, the spreads gets wider during the major news or high liquidity. This is how the market works. However it is better to have 0,4 pips spread almost all of the time and sometimes 1 pip (during the news), instead 1.5 fixed spread from Market Maker
I got your point; no way to avoid this issue! Thanks for your opinion!
  • #46
  • Oct 23, 2018 11:35pm Oct 23, 2018 11:35pm
Quoting DwainUK
{quote} Yea, it is irritating. But there is no way to avoid it. On all brokers with floating spreads, the spreads gets wider during the major news or high liquidity. This is how the market works. However it is better to have 0,4 pips spread almost all of the time and sometimes 1 pip (during the news), instead 1.5 fixed spread from Market Maker
Agree with you! that's why i always prefer variable spreads instead of fixed spreads.
  • #47
  • Oct 24, 2018 7:41am Oct 24, 2018 7:41am
Quoting lwwwdo
I Think leverage is depending on their Trading style. Usually most of broker offer 1: 500 leverage you so you can start with 100$ for the first trading I think the low spread is important.
If you start trading with first deposit of $100, after a while, when you start losing, your orders will be Stopped Out automatically, due to insufficient margin. So your order will not have time to wait the price return and will be closed on its biggest loss. I think, $500 deposit is more appropriate for initial deposit, in order to prevent any unwanted "Stop Outs"
  • #48
  • Oct 24, 2018 1:58pm Oct 24, 2018 1:58pm
Quoting DwainUK
@NathanAstel, the demo strategies never works on live
God dammit, then how does a Wana be trader stars? From what I've read people say that you practice on the demo, double the capital of the demo like 2-3 times just to be sure, the start with real money.
  • #49
  • Nov 8, 2018 9:27am Nov 8, 2018 9:27am
Quoting FuNNy Panda
{quote} God dammit, then how does a Wana be trader stars? From what I've read people say that you practice on the demo, double the capital of the demo like 2-3 times just to be sure, the start with real money.
Yea, if you can double your demo capital few times- it makes sense to try on live. But firstly you have to "do" it, then try
  • #50
  • Nov 9, 2018 7:04am Nov 9, 2018 7:04am
Quoting DwainUK
{quote} Yea, if you can double your demo capital few times- it makes sense to try on live. But firstly you have to "do" it, then try
True. And it's good to see whether they can do that over a long period of time, so they can be sure it was not a fluke.
  • #51
  • Nov 10, 2018 7:13am Nov 10, 2018 7:13am
Quoting DwainUK
{quote} Yea, if you can double your demo capital few times- it makes sense to try on live. But firstly you have to "do" it, then try
Yes, it’s a good indication! But making double capital by 1 or trade is not meaningful! Agree?
  • #52
  • Nov 12, 2018 2:37am Nov 12, 2018 2:37am
Quoting lwwwdo
I Think leverage is depending on their Trading style. Usually most of broker offer 1: 500 leverage you so you can start with 100$ for the first trading I think the low spread is important.
which leverage is more appropriate for you , it depends on your trading ability and managing risk approach , even though leverage contains huge risk at all times but there is a chance to ensure good profit by using this if you have these materials.
  • #53
  • Nov 15, 2018 1:56am Nov 15, 2018 1:56am
Quoting DarrenLehma
{quote} Yes, it’s a good indication! But making double capital by 1 or trade is not meaningful! Agree?
Of course, I mean by using some strategy which generates steady growth. If you can double few times your capital, by using the same strategy- it seems the strategy is promising
  • #54
  • Nov 18, 2018 2:30am Nov 18, 2018 2:30am
High leverage is a good Servant but a bad Master
  • #55
  • Nov 19, 2018 6:26am Nov 19, 2018 6:26am
Quoting Qcw
High leverage is a good Servant but a bad Master
I got your point and it’s correct! Having a high leverage is not a bad option, until we are using.
  • #56
  • Nov 20, 2018 7:26pm Nov 20, 2018 7:26pm
Quoting oliverfxldn
Sorry for the sheer ignorance of these questions...
Don't be afraid to ask questions - even if you feel they are ignorant.

I am a FX rookie myself and really struggled understanding basic concept such as leverage too. In particular I was having a hard time understanding the difference between what leverage was and what margin was. In my mind the two terms are interchangeable, even though that's not right. I also struggled understanding how to calculate the value of a pip, which is really frustrating because everyone says its easy or basic math. So basically people are telling me i'm ignorant at basic math.

I spent a lot of time researching these basic concepts on youtube and taking notes on countless videos. I also started taking copious notes on the babypips course and reading lots of investopedia articles. Investopedia seems to have a detailed article written about almost any question I have - simple or advanced. The thing that has helped me the most though, is bugging the customer support at my broker through their live chat with tons of questions about things I don't understand.

I am gaining knowledge from the time I am spending teaching myself, but I still am humbled by my simplistic understanding of how it all works. I used to have a high school teacher tell me, "If you can't explain it, you don't know it", and I believe she was right.

I recommend you do deep research into the things that you feel might be "ignorant" questions, until you reach the point that you can easily explain and teach the concepts you've learned.

I know there already a couple of pages of responses on this thread to your questions - but if someone approached you on the street and asked you what leverage is, could you explain everything clearly to them and be able to answer any follow-up questions they have, such as if they can lose all their money or if you can adjust the leverage (as you asked here)?
If you're gonna be a bear, be a grizzly
  • #57
  • Nov 22, 2018 6:05am Nov 22, 2018 6:05am
Quoting Kxeroo
… With leverage … Your actions mean nothing to the market. It just determines your bet size and it is given to you so you can blow up your account quicker. Market moves with real trades. Direct trading. Just like the one you do in an exchange office. At the end of the day liquidity providers (banks) make a settlement with their customers (other banks, brokers, other financial institutions etc.). … Leveraged transactions however cleared within the broker. They match and settle all transaction within their pool and those left over deficit or suplus...
Every trade moves the market in principle — precisely because the retail broker has to service any imbalance from its in-house clearing on the wider market.

Do notice that opening a position is a trade, and closing the position is in principle a reverse trade which more or less (but not perfectly) cancels the effect of the opening trade on the market as a whole.
  • #58
  • Nov 22, 2018 6:23am Nov 22, 2018 6:23am
With regards to leverage, only once you have a definite trading strategy, then it is possible to determine how much leverage can be applied to that strategy without breaking it.
Reliably does leverage always multiply risk and losses only.
  • #59
  • Nov 22, 2018 11:13pm Nov 22, 2018 11:13pm
Quoting Machinist
With regards to leverage, only once you have a definite trading strategy, then it is possible to determine how much leverage can be applied to that strategy without breaking it. Reliably does leverage always multiply risk and losses only.
It multiplies our profits also.
  • #60
  • Nov 23, 2018 2:20am Nov 23, 2018 2:20am
Quoting Natalie45
It multiplies our profits also.
So long only as it does not turn them into losses.
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