Hello Trader community,
a statement that I ask again and again for many month, because in the forums it is very often written by a high risk of leveraged investment products.
I only trade Forex in my feetime, just for fun.
what makes it different, if I use a leverage of 100 or 400, the difference is clear to me:
If I take a trade, 1 lot of EUR/USD with a leverage of 400, I have to give a lower amount of margin to my broker as I would using a leverage of 100.
The margin I always get back from by broker, if I use stop loss limits.
so I can determine or calculate my risk by my margin requirement as a basis.
or in other words:
if a EUR/USD trade brings me 50 pips, volume of 1 lot, I have a profit of $500
whether I am using a leverage of 1 or 400, my profit is always 50 pips/$500
or the trade should be stopped out by my SL (eg. RRR = 1), which means I have minus of 50 pips/minus $500.
whether I am acting with a leverage of 1 or of 400.
Can someone explain this "panic-thought" in public space?
So why a higher leverage should be a higher risk? (Im talking about absolute risk and not relative risk)
greetings, forexmaster.
(in your replies please do always use examples with a lotsize of 1)
a statement that I ask again and again for many month, because in the forums it is very often written by a high risk of leveraged investment products.
I only trade Forex in my feetime, just for fun.
what makes it different, if I use a leverage of 100 or 400, the difference is clear to me:
If I take a trade, 1 lot of EUR/USD with a leverage of 400, I have to give a lower amount of margin to my broker as I would using a leverage of 100.
The margin I always get back from by broker, if I use stop loss limits.
so I can determine or calculate my risk by my margin requirement as a basis.
or in other words:
if a EUR/USD trade brings me 50 pips, volume of 1 lot, I have a profit of $500
whether I am using a leverage of 1 or 400, my profit is always 50 pips/$500
or the trade should be stopped out by my SL (eg. RRR = 1), which means I have minus of 50 pips/minus $500.
whether I am acting with a leverage of 1 or of 400.
Can someone explain this "panic-thought" in public space?
So why a higher leverage should be a higher risk? (Im talking about absolute risk and not relative risk)
greetings, forexmaster.
(in your replies please do always use examples with a lotsize of 1)