Basic understanding of Leverage

[davidjss]

Basic understanding of Leverage

At the moment trading in the Forex market is that you can trade with a leverage of 1:100,
that is, to trade $ 100, the capital you need is 1 / 100 its course, or $ 1.
Nominal $ 1 it was the one who called the margin.
Margin is what you use to trade currency worth $ 100 or so called quantity.

 

[ayushsrk]

Leverage is like a borrowing and we have to say it is a borrowing but we donot need to pay that back.Leverage depends on the broker that you are selecting.Some brokers are also giving you upto 1:1000 leverage.And that actually means that the broker is providing you 499$ for every dollar that you are trading.

 

[kalpeshmkm]

I have some basic information about leverage like leverage it borrowed money from the brokers and we can use it for make our trade with small amount of money but we can not loss this money before loss our trade will close.

 

[budado]

Its actually not a borrowed money but you use your money (capital) as leverage. Meaning you are betting our own money and increase or decrease the stake of risk by increasing or decreasing your leverage.
For example if you use 1:100 leverage that mean if you going to incur loses your loses will be 100 times that your actual loses or if you make profit your profit will be 100 times more than the actual profit.

 

[rexway]

Well maybe if the person like to call it borrowed I dont mine because its almost similar leverage is like getting additional money to trade with just to increase your margin level .to avoid some kind restriction to enter some market.

 

[nasim39]

the leverage that i use is of 1:200 and i think that using this much leverage is good enough and i think that we should not be using any higher leverage as it is very much risky to be higher leverage it may blow our account

 

[Cutiekc]

Well, I see that most newbies who are coming into forex trading are now relying on the using of leverage in other to make more more regardless the initial amount they used. Well, it is quite true but using leverage give the chances of making more money but then it makes our position more prone to lose and lose is more quicker.

 

[barood4money]

At one point you are right [MENTION=75]Cutiekc[/MENTION]. But at the other point as you said, there is more chance of making profit. If you are not using the advantage of leverage then also there is a fear of losing. But as you said, newbie should think twice before using leverage.

 

[kaiceaziz]

I have understood leverage now. It s something related to margin risk ratio and the overall capital. Every broker requires you to keep a minimum 2% margin in your balance, this means that you must have at least 2% of the total amount of your trade available as cash in the account, 2% margin is equivalent to a 50:1 leverage ratio (1 divided by 50 = 0.02 or 2%). The relationship between leverages and minimum margin requirements can be explained as the following :leverage-required margin
50:1 2%
40:1 2.5%
30:1 3.3%
20:1 5%
10:1 10%
i hope i made it clear for you now.

 

[Cutiekc]

At one point you are right [MENTION=75]Cutiekc[/MENTION]. But at the other point as you said, there is more chance of making profit. If you are not using the advantage of leverage then also there is a fear of losing. But as you said, newbie should think twice before using leverage.

Yes they should think twice and see if the knowledge they are having can lead them on using leverage. Most of the time I have seen or heard those who actually traded with leverage lossing money so therefore it is not up to 50 percent guaranteed.

 

[barood4money]

Yes they should think twice and see if the knowledge they are having can lead them on using leverage. Most of the time I have seen or heard those who actually traded with leverage lossing money so therefore it is not up to 50 percent guaranteed.

I think whether you are using leverage or not, the ratio stays at 50:50. You may earn huge profit or may suffer huge loss. And if you are not using leverage then also the ratio will stay at 50:50.

 

[Cutiekc]

I think whether you are using leverage or not, the ratio stays at 50:50. You may earn huge profit or may suffer huge loss. And if you are not using leverage then also the ratio will stay at 50:50.

I don't think so, because when you are making use of leverage then you are having more risk and more chances of making huge profits with you little funds. But when you are trading normal, you are also have chances of making profits but not as enormous as that of leverage and your position is less prono to lose when you trade with less leverage.

 

[barood4money]

I don't think so, because when you are making use of leverage then you are having more risk and more chances of making huge profits with you little funds. But when you are trading normal, you are also have chances of making profits but not as enormous as that of leverage and your position is less prono to lose when you trade with less leverage.

That what I said. Whether you are using leverage or not. There will be chances of profit or loss. And if you are using leverage, there will be chances of huge loss or huge profit. Simple.

 

[Cutiekc]

That what I said. Whether you are using leverage or not. There will be chances of profit or loss. And if you are using leverage, there will be chances of huge loss or huge profit. Simple.

More chances of loss comes often when you are not having enough knowledge that will guide you. Most of the lossers in here are often making use of the leverages and they are yet to make it. Although making use of small amount will be much better because then you wont be that expose to risk

 

[barood4money]

More chances of loss comes often when you are not having enough knowledge that will guide you. Most of the lossers in here are often making use of the leverages and they are yet to make it. Although making use of small amount will be much better because then you wont be that expose to risk

That means you want to say that only losers use leverage.? And the top most traders and professional brokers who use leverage are biggest fool in the world.? I think it is stupidity that being able to earn $10 only and judging about them who earns $10000+ daily.

You can say that you don't like using leverage. But you can't judge others. Then it will be like the story of The Fox and the Sour Grapes. Hope you know the story.

 

[riddick09]

Yes, I also don't understand that he meant here of leverage because, we do have different leverage 1:1 to 1:1000 or even higher. Winners and losers in Forex trading use leverage so, it's not limited losers because, a trader must have option for their leverage for their margin.

 

[barood4money]

Yes, I also don't understand that he meant here of leverage because, we do have different leverage 1:1 to 1:1000 or even higher. Winners and losers in Forex trading use leverage so, it's not limited losers because, a trader must have option for their leverage for their margin.

Yes, I agree with you. There are different leverage margins. You can choose as per your comfort. And most of the experienced traders and brokers use leverage facility.

 

[Daisy]

Yes, leverage comes in handy for the pro trader. If you're good at trading then you should have some money to trade with right. If yo're talented then the broker can also get some spread from you. So leverage is for the good trader and I'm sure there are plenty of good traders who trade well in those circumstances but for me I go modest on the forex leverage. I don't risking too much cause I'm new to forex and I'm afraid of losing just like everyone else.

 

[haneefzain]

Leverage is not a extra amount which is provided by broker but it is the ratio of capital and your trading risk..as much you increase leverage your trading risk also increase...

 

[riddick09]

The most popular leverage offered by the brokers are 1:500 and 1:1000 because, the higher the leverage, the higher margin or more trades simultaneously that we can execute. Leverage is a matter of our choice for the risks we will take whether we are good for high risks or not.