Are you in favour of using leverage?

Do u use levearge leverage?


  • Total voters
    74
#1
Hi
I've been using leverages from the very first day when I used to paper trade stocks and then moving to real trading and these days trading currencies, (Forex) The results are not bad infact they are good.
Whenever i discussed about using leverages majority of taders said they dont use it, it was too risky. I would like to know how many of us use leverage or would like to use in near future?
Any comments on why or why not to use leverage are most welcome.
Regards
Robin..
 
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ash.paul

Active Member
#2
.
Whenever i discussed about using leverages majority of taders said they dont use it, it was too risky. Robin..
Either they are not traders or you have just misunderstood it. Leverage is always being the best tool in MoneyMgt. It doesnot matter how much leverage you take but it does matter how much risk are you willing to take before entering the trade. Leverage actually increases your position size but remember to keep your risk same i.e for me it is 2%of the account size. I have wide stops (when i trade a Monthly TF) but again my risk is the same 2%max but my position size is less this time compared to shorter TF. So hope you can do the math!
 
#3
Hi
I've been using leverages from the very first day when I used to paper trade stocks and then moving to real trading and these days trading currencies, (Forex) The results are not bad infact they are good.
Whenever i discussed about using leverages majority of taders said they dont use it, it was too risky. I would like to know how many of us use leverage or would like to use in near future?
Any comments on why or why not to use leverage are most welcome.
Regards
Robin..
Initially one should not use leverage because it will be difficult for novice traders to exit on stop loss or small loss, they may add to losing position instead of cutting losing position. After due experience can use leverage who becomes disciplined ,can manage money with strict stop loss......
Overall using leverage is not a bad idea but should be very careful.
overleveraged position should not be kept open overnight cause we dont know what will happen tomorrow gap up or gap down. any bad news may trigger market sharply
 
#5
I agree with Ash.paul, munde and capricorn, I agree its a great tool, and I agree the leveraged positions should not be left overnight.
I also believe that Milk on the stove and open postions should never be left unattended. Following a strict stop loss, only intraday trading, and back test my strategies before trading helps me take the most out of Leverage.
 
#6
Either they are not traders or you have just misunderstood it. Leverage is always being the best tool in MoneyMgt. It doesnot matter how much leverage you take but it does matter how much risk are you willing to take before entering the trade. Leverage actually increases your position size but remember to keep your risk same i.e for me it is 2%of the account size. I have wide stops (when i trade a Monthly TF) but again my risk is the same 2%max but my position size is less this time compared to shorter TF. So hope you can do the math!
Hi Ash.paul
Haven't talked to you in a long time, how's ur forex doing?
 

yasirdxb

Active Member
#7
Another use of leverage, especially if you are trading Fx is that you can reduce broker risk by keeping majority of your trading capital in your bank account where it is safer while keeping the essential margin in your trading account.

Ex:-

say.. your trading capital is 10k and you risk 2% in each trade. that is $200.
if you are not using leverage, you'll have to keep all your trading capital ie:10k with the broker to buy/sell 10k units of a currency pair. if the broker goes under, you lose your entire capital.

now if you were employing a 200:1 leverage, you only need $50 to buy/sell 10k units. and your risk in this case $200. so in practice you only need to have $ 250 in your account to take that trade,where your entire capital is exposed to the broker risk. so always keep majority of your capital in your bank account where it is safe and send only a small portion (say..25%) to the trading account.dont forget to treat both accounts as one when calculating position size.

ps: if your trading capital is a few thousands, forget about this. still you may want to think about it:).

Yasir.
 
#9
Now, how good or bad the results could be after using leverage, as people say if things go wrong ur account will be blown up in few days or weeks, on the same time if things go right can we double the money in the same period of time?
By things I mean our strategies, market movements, wrong decisions, false entries etc etc.
Any comments ?:)
 
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biyasc

Well-Known Member
#10
why not. but one of my experienced trader friend told me to use maximum exposure of 2.5 times & thats what i am following in these days.
 
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