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Thoughts on 50:1 Leverage

  • #221
  • Sep 9, 2010 11:24am Sep 9, 2010 11:24am
Inserted Video


Here is another great one. 550 pip prediction
  • #222
  • Edited 11:45am Sep 9, 2010 11:25am | Edited 11:45am
Quoting pipmutt
lol, well make your mind up!


It's funny that in all these threads whinging about the reduction in leverage not one person has given an example of how they (would) use >50:1, not one. They want something but they have absolutely no idea what to do with it, or how to justify it! Classic!
Make up my mind? I said nothing contradictory.

The fact that you read some contradiction into my statements reveals some cognitive dissonance on your part, and is probably a huge impediment to your trading.

I explain on this forum exactly how I trade, with parameters for four different leverage levels including 50:1 and 10:1, do you?
Open to new approaches.
  • #223
  • Sep 9, 2010 11:36am Sep 9, 2010 11:36am
Quoting Marv
1. From a pure statistical standpoint, a scalper is up against a higher "house edge" than a swing/position trader. BUT, maths/statistics don't take into account the "readability" of price behavior, a scalper does and uses it to profit REGARDLESS of the higher "house edge". To say that scalping is worse than other styles of trading goes only to show that you haven't studied price enough to realize the potential of good scalping.

2. You guys are going off-topic.
Marv, I can agree, costs of scalping could be a problem if you're going for very very short scalps like I used to with close to max leverage depending on your broker and commission deal. This I don't do anymore. There are many reasons why statistics would say scalping is not as profitable, but this statistics don't take into account a lot of things.

but yes we are going off topic, cause that guy is weird. reading through all my posts... trying to "crush" me LOL.

I was merely giving an example that scalping or intraday trading does NOT take up my whole day... a few hours and I am done. I can live with just the frank-london open session for about 2 hours tops. If I get nothing or take a loss or 2, I'll try back during NY for 2 hours. today, I took 2 trades during each session. not a big deal.
  • #224
  • Sep 9, 2010 12:49pm Sep 9, 2010 12:49pm
To be fair, I don't think that I said it's a "fact" that they are not profitable.. But I have never seen or heard of anyone needing 200:1/400:1 leverage and I was just stating that I don't think that is necessary and not only that, but they should get used to trading lower leverage because if they ever do make it, they won't be able to trade with that leverage higher up on the rank.

I think you will agree that leverage is not the problem with these traders and they should be worried about trading and not the amount of leverage they are offered. 50:1 is fine. If it's causing a problem in your strategy, find a new one, there are many. I also said when I first came here that I think "in a way" it's good, BUT, I also don't like the fact that it was done to us and not the entire globe. Yes, it was bullshit, unfair, etc, but I have learned that is life. In the end, my thoughts on 50:1 leverage is that is is more then enough, I never needed more and I am at a broker where 50:1 is max and has been for awhile.
  • #225
  • Edited 4:13pm Sep 9, 2010 3:26pm | Edited 4:13pm
And there it goes on the dripple about reducing leverage and that the government is looking after the poor traders.
So lets look at Futures traded on the CME (buddy's of your representatives in Washington):
Minimum account required: $2500
Minimum margin required per E-mini contract:$500
Value of tick per one E-mini contract:$12.50

I said it once already, stop watching the brainwash box and start to inform yourself about whats going on. Read above over and over and maybe after 500 times reading above you will realize that the Frank Dud bill has nothing to do with the bullcrap about to protect the mum and dads from dangers product or whatever your argument is.
If you think FX is dangers for newbies try futures were you absolutely can not reduce the contract size.
The numbers do not lie, $2500 with a value change per tick of $12.50, were is your CME puppet here to intervene?
  • #226
  • Edited Sep 10, 2010 1:37am Sep 9, 2010 4:34pm | Edited Sep 10, 2010 1:37am
Quoting Pipstrumpf

.......start to inform yourself about whats going on.......

If you think FX is dangers for newbies try futures were you absolutely can not reduce the contract size.
The numbers do not lie, $2500 with a value change per tick of $12.50, were is your CME puppet here to intervene?
Ummm, what about M6x?

".....start to inform yourself about whats going on....."

Yeah, right.......
  • #227
  • Sep 10, 2010 1:25am Sep 10, 2010 1:25am
Quoting Marv

leverage and actual risk per trade are definitely not the same thing, as in: having higher leverage doesn't necessarily mean you're risking more than you should be in one single trade, duh!

Quoting Marv

Just because your bröker allows you to trade a maximum of 200 lots at once doesn't mean that you're going to put your entire equity in one single trade.
lol, I think you're confusing leverage with your brokers margin requirement!
  • #228
  • Sep 10, 2010 2:23am Sep 10, 2010 2:23am
Quoting Maxsmart

have very little faith in making 6 figures in the forex market which is an easily attainable goal.
Quoting pipmutt

You need to quote some other numbers for that to mean anything! 6 figures on what, a million, 100k, 200 bucks?

Quoting Maxsmart

Six figures Pips mutt is an annual return of at least 6 figures Pipsmutt. 100,000 contains six figures. I am saying that this is attainable in the Forex

I'm assuming you're talking money here and not percentage! Of course it attainable but it's meaningless out of context. Just saying '6-figure annual return' without giving any other numbers means nothing, I'm surprised a supposedly profitable trader wouldn't know that!

By the way, returns are normally quoted in percentage terms.....
  • #229
  • Sep 10, 2010 2:43am Sep 10, 2010 2:43am
Quoting pipmutt
I'm assuming you're talking money here and not percentage! Of course it attainable but it's meaningless out of context. Just saying '6-figure annual return' without giving any other numbers means nothing, I'm surprised a fund manager wouldn't know that!
That depends on your point of view: if you are looking at the six figures to determine if it is an acceptable return on investment, you certainly need to know what the base investment is...but if you are just looking at the six figures as being a yearly income, which I would bet majority do, it doesn't really matter what the base investment is.


Just my opinion...
  • #230
  • Sep 10, 2010 3:12am Sep 10, 2010 3:12am
Quoting moneymaker2

...but if you are just looking at the six figures as being a yearly income, which I would bet majority do, it doesn't really matter what the base investment is.
'Doesn't really matter'!

Then how could you say it's attainable or even gauge if it's an acceptable return and the most productive use of capital? For example a 6-figure return on 200 bucks would be unattainable, 6-figures on a million bucks could be a poor return by comparison. Anyway, just saying '6-figures' could mean anything from 100k to 999k, it's way too ambiguous.

Aside from being more professional, percentages are an easier and more concise way of expressing return which is why most investments use them.

We won't even go into risk adjusted return!
  • #231
  • Sep 10, 2010 3:46am Sep 10, 2010 3:46am
Quoting Marv
1. From a pure statistical standpoint, a scalper is up against a higher "house edge" than a swing/position trader. BUT, maths/statistics don't take into account the "readability" of price behavior, a scalper does and uses it to profit REGARDLESS of the higher "house edge". To say that scalping is worse than other styles of trading goes only to show that you haven't studied price enough to realize the potential of good scalping.
exactly
  • #232
  • Sep 10, 2010 7:49am Sep 10, 2010 7:49am
Quoting Pipstrumpf
And there it goes on the dripple about reducing leverage and that the government is looking after the poor traders.
So lets look at Futures traded on the CME (buddy's of your representatives in Washington):
Minimum account required: $2500
Minimum margin required per E-mini contract:$500
Value of tick per one E-mini contract:$12.50
The CME required margin for ES is $5625 - current contract face value is $55,000 (1100 * 50) so the leverage is approx 10:1. 1 ES point = $50 so if you are fully margined 1 point = 1% of your account. Average daily range is around 15 points so you would be totally insane to trade with that amount of leverage.

Euro futures are about 40:1 (contract value 125,000 Euro, margin 4000 USD)

Brokers can let you trade with lower margins but then the broker is putting up the difference. My broker lets you trade with half that during normal trading hours but requires full margin for overnight holds. And at volatile times they have enforced full margin requirements.
  • #233
  • Sep 10, 2010 9:47am Sep 10, 2010 9:47am
Quoting pipmutt
I'm assuming you're talking money here and not percentage! Of course it attainable but it's meaningless out of context. Just saying '6-figure annual return' without giving any other numbers means nothing, I'm surprised a supposedly profitable trader wouldn't know that!

By the way, returns are normally quoted in percentage terms.....
Pipmutt clearly when I say $100,000 I mean money as you see the dollar sign lol. 6 figures is clearly $100,000 count the figures. I'm surprised a human being that is an adult cannot count and would not know what a 6 figure salary is.

lol finally, just because most people talk about return in percentages does not mean that I have to. I said at least 6 figures as well. I think that is attainable with any size trading account over $10,000. lol I do not know what that has to do with my profitability Pipmutt. I think your kinda reaching here to create something. Calm down...
  • #234
  • Sep 10, 2010 10:59am Sep 10, 2010 10:59am
Quoting pipmutt
Then how could you say it's attainable or even gauge if it's an acceptable return and the most productive use of capital? For example a 6-figure return on 200 bucks would be unattainable, 6-figures on a million bucks could be a poor return by comparison. Anyway, just saying '6-figures' could mean anything from 100k to 999k, it's way too ambiguous.

Aside from being more professional, percentages are an easier and more concise way of expressing return which is why most investments use them.
That is why I said: "That depends on your point of view: if you are looking at the six figures to determine if it is an acceptable return on investment, you certainly need to know what the base investment is...but if you are just looking at the six figures as being a yearly income, which I would bet majority do, it doesn't really matter what the base investment is."

To say that making six figures off of $200 in unattainable is probably not as accurate as saying it is very unlikely. The probability of it happening is extremely low, but the possibility does exist.

My point with the money is that is what people deal with on an everyday basis. You go to a party and someone asks you how much you make trading currencies, and you say "I make about $50K a year."....people can get their minds around an amount without knowing what you have invested to make that. They don't care if you are getting such a low return on your investment that you must suck as a trader...they are interested in the amount of money that you make doing whatever you do that you wouldn't have otherwise.

You go to the same party and get asked the same question, so you puff out your chest and say "I made almost 1000% return last year!" and people bow down because you are making such a high return....but if you are talking 1000% on a $200 investment, that's only $20K. Percentages are definately the way to determine which investment model you want to go with, but it is the dollar amount per year that majority of the people use to determine success. You routinely hear "He makes a lot of money!", but I can't remember the last time I heard "He has a good risk adjusted return!"

To clarify, most of the people I know consider the term "six figure" as being over $100,000 but less than $200,000...over that people tend to go in $100K increments or $250K increments. And since we were all making six figures, I consider that an accurate sampling.

Again, just my opinion....
  • #235
  • Sep 10, 2010 3:58pm Sep 10, 2010 3:58pm
Quoting Maxsmart
....have very little faith in making 6 figures in the forex market which is an easily attainable goal.
Quoting Maxsmart
Pipmutt clearly when I say $100,000 I mean money as you see the dollar sign lol. 6 figures is clearly $100,000 count the figures. I'm surprised a human being that is an adult cannot count and would not know what a 6 figure salary is.
No $ sign in your original post as far as I can see. As I've already explained to you, 6-figures means nothing in this context without other numbers.

Quoting Maxsmart
lol finally, just because most people talk about return in percentages does not mean that I have to. I said at least 6 figures as well. I think that is attainable with any size trading account over $10,000. lol I do not know what that has to do with my profitability Pipmutt. I think your kinda reaching here to create something. Calm down...
Who's interested in your profitability? Not me, it has absolutely no relevance in the discussion!
  • #236
  • Sep 10, 2010 4:15pm Sep 10, 2010 4:15pm
Quoting moneymaker2

You go to a party and someone asks you how much you make trading currencies......
But we're not at a party, we're (supposedly!) on a trading forum, discussing subjects presumably with other traders (although that's not always immediately apparent!)

Quoting moneymaker2

You go to the same party and get asked the same question, so you puff out your chest and say "I made almost 1000% return last year!" and people bow down because you are making such a high return....
At least that would have more relevance than saying 50k!

Quoting moneymaker2

it is the dollar amount per year that majority of the people use to determine success.
Really? Someone can be successful in their job yet be relatively low earners, just as people can be high earners yet be regarded as unsuccessful. In trading and investment circles you rarely hear dollar amounts mentioned unless it's in a wider context.

Quoting moneymaker2

You routinely hear "He makes a lot of money!", but I can't remember the last time I heard "He has a good risk adjusted return!"
Like I say, in investment/trading circles you hear of very little else when discussing performance, especially lately! If you just said '50k', '6-figures', or 1000% when asked about your returns you would probably be laughed at simply because it's so utterly meaningless!
  • #237
  • Edited 10:00pm Sep 10, 2010 4:33pm | Edited 10:00pm
Quoting jzw
The CME required margin for ES is $5625 - current contract face value is $55,000 (1100 * 50) so the leverage is approx 10:1. 1 ES point = $50 so if you are fully margined 1 point = 1% of your account. Average daily range is around 15 points so you would be totally insane to trade with that amount of leverage.

Euro futures are about 40:1 (contract value 125,000 Euro, margin 4000 USD)

Brokers...
JZW

I took my example from a reputable futures Broker located in Chicago.
If the CME puppets were that concerned about Newbies, Mum's and Dad's they would have longtime adjusted the minimum account requirement to trade instruments such as futures, but no for some strange reason that is not the case.
Another sample, CFD's (leverage for most equities is 10:1), US Citizen are not allowed to trade those instrument even CFD's are an alternative to options for protecting your share portfolio. Again this time it is a Wall Street puppet pulling the strings. Every informed investor knows if CFD's would be allowed in the US the volume of shares traded on Wall Street especially would drop big time.
Trading FX is the best option available for newbies as you can learn trading live with micro accounts, regardless of the leverage applied. There is no other instrument available were the contract size can be adjusted like on FXSpot, so the high leverage argument is non existent.
  • #238
  • Sep 10, 2010 5:05pm Sep 10, 2010 5:05pm
Quoting Pipstrumpf

I took my example from a reputable futures Broker located in Chicago.
If your CME puppets were that concerned about Newbies, Mum's and Dad's they would have longtime adjusted the minimum account requirement to trade instruments such as futures, but no for some strange reason that is not the case.
They already did on currencies, M6x
  • #239
  • Sep 11, 2010 11:50am Sep 11, 2010 11:50am
Quoting pipmutt
.... In trading and investment circles you rarely hear dollar amounts mentioned unless it's in a wider context. Like I say, in investment/trading circles you hear of very little else when discussing performance, especially lately! If you just said '50k', '6-figures', or 1000% when asked about your returns you would probably be laughed at simply because it's so utterly meaningless!
I suppose it is just a different way of looking at things. I am simplistic and look at the bottom line, which to me is how much money I put in the bank over the course of a time period, be it monthly or yearly.

In my mind, if I determine I can't make X amount in a business venture, I simply don't pursue it any further...I don't care what the rate of return is. I can buy a $0.99 DVD at Wal-Mart and sell it on eBay for $2.99 plus about $0.25 profit on shipping (I've done that). That equates to roughly 300% return. But unless I can do that several hundred times a day, it isn't worth it to me as a business venture. But if I buy an apartment complex for $1.2 million and sell it for a 300% profit, it becomes worthwhile. So to me, the % return means nothing...it is the profit that I look at to make decisions.

My goal in investing is to make as much money as I can as quickly as possible. That is why I began daytrading options and ultimately got into currency trading. To get back to the subject of this thread, that is why I like 400:1 margin requirements: it allows me to use my money to the fullest extent possible. Margin itself does not make you money, because you make the same on a 20 pip move with 10 lots whether you are trading 10:1, 100:1, or 400:1....but the higher margin allows me to buy more lots with less money in my account. And that in turn allows me to withdraw more money from my account to pay off houses and vehicles. To me, that is using my money to the fullest extent possible, because you actually need very little money to maintain a good lifestyle if everything you own is paid off, and you never know what will come up....like changing margin to 100:1 and then to 50:1...or like maybe making US residents only trade US brokers...stuff like that.

Is high leverage a right? No...Is lowering it being unfair? In reality, probably not....Am I going to complain about it? You bet, because I don't like someone else looking out for my "best interest"....I am a full grown adult and can do that for myself.

So when I have a concern, I voice my opinion, whether it does any good or not. That is why I complained when they stopped selling McRib Sandwiches at McDonalds, ....because sometimes you just have to take a stand for those important things in life!

Good trading...
  • #240
  • Sep 11, 2010 12:10pm Sep 11, 2010 12:10pm
Quoting moneymaker2

So when I have a concern, I voice my opinion, whether it does any good or not. That is why I complained when they stopped selling McRib Sandwiches at McDonalds, ....because sometimes you just have to take a stand for those important things in life!
Ah well now you are talking about an important issue, I did the same when they took off the Big Tasty! Didn't make any difference though.

I mean who wouldn't want one of these......yummy!

http://i54.tinypic.com/2itgc5g.jpg


Quoting moneymaker2

Good trading...
Same to you (even though I don't agree with your approach to business!)
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