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Question About Leverage

  • Post #1
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  • First Post: Dec 18, 2018 8:12am Dec 18, 2018 8:12am
So I have this account with 1:1000 leverage using $3000. Is it the same with 1:100 with $300?
Thank you
Quoting andrern2000
So I have this account with 1:1000 leverage using $3000. Is it the same with 1:100 with $300? Thank you
No, it's not. 1:1000 leverage allows one to open a 10 lot trade for example, while the 1:100 leverage will limit it to 1 lot. Be careful, because having high leverage may push you to open recklessly trades with many lots in and if the market price moves against you rapidly you could loose all your capital.
Risk Management is of utmost importance!
Quoting RCtrader
{quote} No, it's not. 1:1000 leverage allows one to open a 10 lot trade for example, while the 1:100 leverage will limit it to 1 lot. Be careful, because having high leverage may push you to open recklessly trades with many lots in and if the market price moves against you rapidly you could loose all your capital.
Dear RCtrader and andern2000,

Just thought I add some more detail.

Andern2000, what is leverage is just the amount of money the broker will lend you to open a position and reduce the amount of funds needed for margin to hold a position open. This means that the bigger the leverage, the larger position that you can place and hold open. By having a larger position open, the gain or loss from the price movements are much larger. As RCtrader mentioned, this can lead to opening a too large trade in your account (because you can) and the price movements will drain your available equity causing margin calls (asking to deposit more money to hold the trade open), or the trade will be closed automatically at a loss.

Example: 1:1000 Leverage = for every 1 dollar you keep in your account, the broker will give you 1000 dollars to pay for the margin to open and hold a trade. Now, if you think about your second comparison, 1:100, for every 1 dollar the broker gives you 100 dollars. So this is different and much less and the final conclusion is that you will need to deposit 10 times more money to open the same trade on a 1:100 account, as on the 1:1000.

I would suggest to make sure you fully understand the basics such as leverage before trading live to save your self lots of pain, frustration and losses.

Kind Regards,
Tzamo
"Only you can Make the Future you will be proud to be a part of..." -Me
In order to open the same volume trades as with 1:1000 ($3000 capital), on 1:100- you should have $ 30 000 capital Keep in mind, that the higher leverage gives you the opportunity to open bigger volumes with lower margin (capital) requirement.
Quoting DwainUK
In order to open the same volume trades as with 1:1000 ($3000 capital), on 1:100- you should have $ 30 000 capital Keep in mind, that the higher leverage gives you the opportunity to open bigger volumes with lower margin (capital) requirement.
Yes, it is! This is why, which traders have over trading or over lot problem, they should take extra care on leverage issue.
when using leverage, focus on risk management ,
otherwise your trading balance can crush with no reason.
Might also want to note that lower leverage requires more money which increases your biases towards a losing position.
Threesome Daddy
Just to add to what's already been said: Since you seem to be new to the topic of leverage, you should definitely stay on the lower side at the start. 1:1000 might seem tempting, but many people only see how much they can gain, and not how much they can (probably will) lose. Always remember, a good trader can make a decent profit even with a small leverage.
As mentioned by a few already, it is not the same for 1:1000 vs 1:100, each having $3000 and $300
For both to be the same, then if 1:1000 has $3000, then the 1:100 should have $30000

Even then, both are not the same. A 1:1000 leverage requires 10 times less margin to open a trade than a 1:100 leverage.
Higher the leverage, higher the damages too so the new traders being unaware of the market conditions should keep their leverage low in start. There are many sophisticated trading platforms where you can lower or increase the leverage too. Some brokers like hotforex allows 1:1000 on micro accounts and 1:400 on regular account, some crazy offers like 1:3000 which pretty seems unreal to me.
Quoting jollypk
Higher the leverage, higher the damages too so the new traders being unaware of the market conditions should keep their leverage low in start. There are many sophisticated trading platforms where you can lower or increase the leverage too. Some brokers like hotforex allows 1:1000 on micro accounts and 1:400 on regular account, some crazy offers like 1:3000 which pretty seems unreal to me.
Hi jollypok, you are right about the damages that could be done, but I did read a forex book and it always talks about the importance of risk management and how with the right accuracy of a system, high leverage could boost gains. It said that with low accuracy systems, low lot size is good... Wow, 1:3000, really? Which ones? That's crazy!
Quoting jollypk
Higher the leverage, higher the damages too so the new traders being unaware of the market conditions should keep their leverage low in start. There are many sophisticated trading platforms where you can lower or increase the leverage too. Some brokers like hotforex allows 1:1000 on micro accounts and 1:400 on regular account, some crazy offers like 1:3000 which pretty seems unreal to me.
leverage is a very complicated issue in Fx trading , sometimes it bring profit very rapidly , sometimes it causes a great losses and risk in spite of having risk management , but after all its one of the major financial issue in Forex.
its not a complicated issue , very simple issue it is, ensure most powerful analyzing risk management and earn more something by using leverage.
Quoting jollypk
Higher the leverage, higher the damages too so the new traders being unaware of the market conditions should keep their leverage low in start. There are many sophisticated trading platforms where you can lower or increase the leverage too. Some brokers like hotforex allows 1:1000 on micro accounts and 1:400 on regular account, some crazy offers like 1:3000 which pretty seems unreal to me.
Yes; it’s unrealistic! I don’t think, it’s a wise decision to rely on only high trading leverage instead of trading skill.
Quoting NathanAstel
its not a complicated issue , very simple issue it is, ensure most powerful analyzing risk management and earn more something by using leverage.
if you dont mind can you please make sure how much profit you have earned already by using leverage ?
leverage and spreads both are more risky but also profitable if you can manage. but the main problem to be experienced about using leverage and spreads is a long time approach , so traders lost interest and use these at random.
  • Post #17
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  • Last Post: Aug 2, 2020 7:36am Aug 2, 2020 7:36am
leverage is one of the most important tools in forex market. It increases the investment ability. Traders generally choose those brokers which give more leverage than others. So it is a very important to choose a broker which has dynamic and high leverage.
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