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Thread: Leverage, can someone explain it to me?

  1. #1
    I have been a Forex trader for years, and this was really my very first week trading FX. With a 3k account, and in approximately 5 times I took it out of 3k to 7500$ using only a one lot. While I say leverage I would like to say : How can your account size impact how many lots you can use? Forex has made forex very difficult for me to comprehend and if everyone can give a decent explanation I'd greatly appreciate it. Thank you

  2. #2
    Leverage is that the leverage offered by the broker to we can increase the chances of obtaining a profit. If we are trading using leverage 1: 1000 it usually means that we can trade using a 1000-fold financing of our funds. Therefore, leverage is very profitable for all of us

  3. #3
    Leverage -- a tool that lets one particular trade larger amounts, having just part of the amount. For example, with a 1:100 leverage, you can conduct a trade of a USD 100 000 quantity, having just USD 1 000 of your funds.

  4. #4
    Which currency pairs did you exchange to double your funds in 5days and that which had been the lot size?Am certain if the commerce have gone another way around,you'd have lost your funds or had a margin call.All I can is that you're lucky on that commerce.

  5. #5
    Quote Originally Posted by ;
    Leverage a tool that allows one trade larger amounts, having just a part of the sum. As an example, using a 1:100 leverage, you can run a commerce of a USD 100 000 quantity, using just USD 1 000 of your own funds.
    This should only explain what leverage is

    ” How can your account size affect how many lots you may use?”

    I guess that the larger your account dimensions the more lots you can buy

  6. #6
    In my understanding, LEVERAGE is the instrument by which the trader can magnify his/her profits and losses. Higher the leverage greater will be the lots you could trade and less amount would be paid by you and vice versa.
    For instance, Margin = 1/ Leverage, in case your leverage is 1:100 then your margin quantity that will be required to be paid to the broker will be (1/100=1 percent of your notional amount).

  7. #7
    Leverage is extremely valuable for traders who attempt to trade with little capital. Trading Utilizing little capital then it might be better off choosing a high leverage for trading using high leverage, the margin required is Tiny

  8. #8
    Quote Originally Posted by ;
    I've been a Futures trader for years
    Quote Originally Posted by ;
    When I say leverage I mean to say How does your account size affect how many lots you can use?
    Trading for years and do not know how leverage influences your buying power? If your account is 3K and leverage is 1:100 then you can open 300 000 position or 3 lots max. The less is the leverage the safer is the own trading. For instance for 4 decades trading using Hotforex I gradually lowered leverage out of 1:500 to 1:100 and I can safe its hard to drive your account to acute drawdowns as your losing slower

  9. #9
    Simply it is a loan.

    The broker loan you additional money so that you can open bigger positions

    should you deposit 1000$
    along with the broker supply 1:100 leverage just
    that mean you can open positions 100x 1000 = 100 000$ and he will charge you interest.

  10. #10
    Now that you know what leverage is, find out how to handle it. The higher the leverage the quicker you lose your money if your trade goes against you. If you are trading with 500:1 or 200:1 leverage, you have to tighten the amount of drawdown you can allow a trade go into before taking a reduction.

    Consider beginning with 50:1 leverage so you can learn how to control a trade that's in drawdown and also learn to handle risk. Should you turn into a killer trader and excellent risk manager, raise your leverage.

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