Leverage can be your enemy, so be highly careful about it. Avoiding a big amount of leverage is essential for traders because it accelerates the trading risk. Lowering leverage means lowering lot size and it falls into the jurisdiction of risk management strategy. FXOpulence offers decent amount of leverage to traders.
What is leverage in Forex?
- Thread starter Asahi
- Start date
LoanLending
New member
Leverage involves collateralizing your own funds to receive a multiple of those funds as a loan where the maximum loss allowed is 100% or less of those collateralized funds.
For example: 10x leverage allows you to open a $100 position with $10 but you can only lose a maximum of $10 as that is your collateralized margin. You could also achieve a $1000 position with $10 using 100x leverage but that also means you could lose that money instantly as a small move in a $1000 is $10 in unrealized PnL.
It's a capital management tool. It's always better and safer to use your own money with less leverage.
For example: 10x leverage allows you to open a $100 position with $10 but you can only lose a maximum of $10 as that is your collateralized margin. You could also achieve a $1000 position with $10 using 100x leverage but that also means you could lose that money instantly as a small move in a $1000 is $10 in unrealized PnL.
It's a capital management tool. It's always better and safer to use your own money with less leverage.
FXOchartist
Verified member
The concept of leverage is like taking a loan to the broker to open a bigger position size, leverage can boost profit, but the consequence is make narrow margin level when we use a bigger position size, and when the margin level is below the threshold based on broker policy, margin call triggered and the broker automatically closed order one by one until margin level above margin call level. In FXOpen now offer leverage 1:1000 only in the Ticktrader account.
Bash4j
Active member
In terms of leverage, forex and crypto trading differ in their approach. Forex markets have comparatively low volatility, and thus most trades are taken with high leverage. On the other hand, the crypto market is highly volatile.
Leverage enables you to increase your exposure to the forex market by paying an initial deposit – called margin - that’s a fraction of the full value of the underlying market. Your profit or loss is still calculated according to the full size of your position, so leverage will magnify both profits and losses.
While leverage trading on top derivative exchanges like Bitget. can increase your potential profits, it is also subject to high risk — especially in the volatile crypto market.
Leverage enables you to increase your exposure to the forex market by paying an initial deposit – called margin - that’s a fraction of the full value of the underlying market. Your profit or loss is still calculated according to the full size of your position, so leverage will magnify both profits and losses.
While leverage trading on top derivative exchanges like Bitget. can increase your potential profits, it is also subject to high risk — especially in the volatile crypto market.
FXOchartist
Verified member
Like as using the double edge of swords, using high leverage is wisely to use margin trading, despite high leverage giving potential higher profit, the risk is also higher. Type trader who is not easy to control emotion better uses low leverage because it will prevent greed because opening 1 lot size needs a higher margin requirement.
