Underleverage and the consequences

We've all read ad nauseam about the consequences of over leveraging.

What are the consequences of under leveraging?

I could be guilty of it and the consequence is that my account isn't growing as much as it could.

So what do you see as the consequences of under leveraging? Inquiring minds wants to know

Inflation?

A waste of time...unless you think trading is "fun".

Trading is boring

Making money is fun

exactly! I'd rather be travelling... Who likes to watch a bunch of lines and candles any way?

Well. I don't mind keeping an eye on it.

But to stare at it all day? Nah! I'm with you. Traveling.

I'm considering using more leverage but I'm caught between the fear of overdoing it and the consequences of underdoing it.

I think you stated the number one consequence above (bold).

There is nothing smart about risking 1% a trade If you have a hit-rate of 80%. You take measures to Identify your hitrate and then decide on your risk apitite. If you are comfortable with a 30-40% drawdown and your testing Indicates a maximum DD of 20% using the current possition size before strategy re-evaluation measures kick in, then there is no reason not to double your current possition size.

Like everything in trading It all comes down to confidence In your abilities or 'system' and Deciding what you want to risk.

Darkstar wrote a good post about this previously, I cant find it right now though.

Good to see the topic come back up though.

Leon

EDIT: It also depends on where you are as an individual, what are your goals? Are you close to acheiving them? I would actually completely understand If a person who had 500K+ to trade and was already happy with their lifestyle risked 1% with an 80% system. At the end of the day its all about preference.

IMO a guy with £1K who Is very confident with a method such as the one above should take the risk.

RISK RISK RISK, are you willing to take a risk?

Thats what I do. For me, if there isn't an opportunity now, there isn't one for atleast another 3-4 hours.

Setting emotions aside, from a common sense standpoint...If you have a strategy that doesn't result in too many losers, you should leverage up a little more. When I'm convinced about a trade, I always risk between 5-10%. I know this may sound a little too aggressive, but I'm young, have a stable job, and ok with losing it all.

All in all, unless you behave like a complete newbie, there isn't a reason why you shouldn't lever up to atleast 3-4x. I do about 1-5 trades a month, and lever up 10x. I know this is a little too much, but it works for me.

Sums it up for me. Thanks!

I'll be kicking it up a notch.