why not use high leverage accounts

Hi all,
I am curious, if you have a 'system' and you are willing to use it live, you must be confident in the system. Is there any reason therefore not to use a more highly leveraged account. 500-1 would make 5 times the profit (and loss) of 100 to 1.

Thanks
Max

You can have the best "system" in the world and you will always have the element of risk. Always. Someone telling you otherwise is either delusional or maybe even selling you a "system".

At the end, system or not, there is a risk that you might lose. If you want to be in tomorrow, you have to pace yourself.

Some people can get mixed up with this leverage stuff but basically if your system can really support a 10 pip stop loss (example) you can trade with more lots then a system with a 100 pip stop loss and still risk the same % each trade.

Personally I risk 5% per trade and my compounding calc tells me how many lots.

Jay walker is right you need to pace yourself!

**Also 5% is on the high side and not recommended but with my own discretion I have a very high win to lose ratio**

Also common sense really, you go into a trade with leverage maxed out and price retraces a teeny bit you could very well have a margin call.

Why take the chance? Go play roullete it's probably easier lol

Any amount of leverage is fine really, as long as you're encompassing good money management techniques.

I started trading with a maximum of 2% loss risk. I'm now down to 1%.

I started with 50:1 leverage, I'm now down to 10:1 and will get it down to 1:1.

Even if you're trading at $1 or less per pip, stay with it until you build the profits to trade a full lot or more ($10 or more per pip), always sticking to your 1 or 2% loss risk ratio (1% risk or less is of course best and recommended by most good traders).

If you don't practice good money management, you'll only end up busting the bank.

it is not the leverage that's matter

it is the amount you are willing to risk per trade, MM rules

do the math, actually using higher leverage is better if your account size is small (micro/mini) as you will have more margin available to absorb your floating losses

I would have thought that the whole idea is to leverage as highly as you can on trades you are confident in? I realise there's an inherent risk, but surely it's better to have the option than not?

The only way you can do this is if you work for Goldman Sachs.

If you win, you pocket the money. If you lose, you get bailed out.

For those of us who don't work at Goldman Sachs, we have to hold on to our respective sachs while holding on to our f@#king hats.

WRONG!!!!!!!

................................... you could be Donald Trump too.

I am trying to think, have I ever been really "sure" of a trade? Yes, yes I have, of course. That was back when I didn't make any money. Now, my head is in the same cloud with every trade, I am completely stinkin' clueless with everything... yet I make modest gains now. Go figure.

So, you put 100% of your account in each trade?

Margin has nothing to do with you losing money or making money, but just how fast you do it.

With a 400:1 leverage, it may "cost" around $1600 to trade 4 full sized lots; with 100:1, you are looking at about $6400 needed to trade the same number of lots or the same $1600 to trade 1 lot. (By that same token, a 1:1 leverage amount will require you to have something over a million dollars in your account to be able to trade 10 full sized lots).

For the same money, with 400:1 you are basically trading $40/pip and with 100:1 it is $10/pip. A person can trade $40/pip using ANY leverage, depending on their account balance, so there is nothing scary about the leverage amount you use.

If you make a bad trade choice, you will lose money based on the number of lots you have. Now if you sit on your hands and do nothing as your trade goes down the tubes and you get a margin call, you will have less money in your account with higher leverage using the above examples because you are losing at a rate of $40/pip rather than $10/pip. (A simple Stop Loss will prevent a margin call). Margin requirements are not bad in and of themselves. After all, leverage is what allows us "little guys" to even be able to trade the currency markets!

Leverage doesn't make you a good trader nor does it make you a bad trader. Your selection of the trades you get into and what you do once you are in defines that.

Just my 2 pips.....

give this a watch, its a good interview of mark douglas http://www.4shared.com/file/96740657...er_Market.html

even if ur confident in a system that gives u a 90% edge.....out of 10 flips of the coin u get it right 9 times. the sequence of rights and wrongs are still random...and will always be random, with no possible way of finding out which ones will be winners and which ones losers. you could get 10 losers in a row and then get the next 90 trades winners...but by that time u'd be wiped out.

as they say "the market can stay irrational longer than you can stay solvent".

although many traders here trade on accounts with 100:1 or 200:1 available leverage...they don't use it all. e.g. if you have an acct of $1000 and you use 100:1 leverage you are trading position sizes at $100,000 or 1 standard lot. which means u make or lose $10 a tick. so lets say for a decently small stoploss of 30 ticks, you'd be risking 30% of ur acct, on just one trade. in itechdev's example, starting with 2% risk with the same setup as above would mean losing $20 for 30 ticks...or position sizing at $6700 or 0.067 standard lots. which is 6.7:1 leverage on acct size of $1000.

personally i don't know any trader that uses more than 50:1 leverage. i.e. with an account balance of $10,000, trading 5 lots per trade.

Hmm... Jay, you should probably read the rest of my post. Look at what I quoted. It seemed pretty obvious that I was being sarcastic, wasn't even talking about leverage, just those who can be totally reckless and idiots.

Of course I don't use 100% of my account.