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Leverage Isn’t a Bad Thing

页数: 1
Aug 05, 2015 09:59 pm
analyst75 User

帖子: 128
入会日期: 22/11/2014

“The point [is] that a trader has to master their psychology to allow him or her to take many small losses, trade through drawdowns, and let winners run beyond expectations.”- Markham Gross 


Some people preach against leverage because of their own faults. They use trading methodologies that ultimately make average losses that are bigger than average profits, while they should be doing the opposite. While we may find it difficult at first (the same was true of me), controlling losses and making trading decisions become very easy when they become our nature.


In order to know what leverage is in trading, plus the advantages in using it, please search for the information yourself. However, experienced traders should understand what leverage is. Leverage isn’t a bad thing- it’s irrational use of leverage that’s a bad thing.


So I recommend the use of leverage. When leverage is used with strict money management, a heartwarming balance is then found between decent profits and risk control. For example, I use a leverage of 1:100. However, I risk only 0.25% per trades: which means that I use only 0.01 lots for a $2000-account, with a stop of 50 pips per trade.  With an account that’s less than $2000, I’ll recommend conversion to cents, for greater safety.


The greatest achievement in trading is controlling the treacherous statistics called drawdowns, not making profits, for profits are easy to make but difficult to retain. For example, if you made a profit of 10% in this month, you could start experiencing losses in the first and/or the second week of the next month (as it’s true of any trading approach you might adopt). A proof of your proficiency then lies in your ability to lose as little money as possible, going down by, say, 2% - 4% maximum. With this, it’s easier for you to bounce back when the strategy enters another encouraging winning streak. However, a bad trader would lose between 10% - 40% or even more, during such transitory losing streak. What’s the benefit of gaining 20% this month and losing 55% next month?


It’s a good thing to help our friends and well-wishers to be the best they can be in their trading careers – hence my articles. Directly or indirectly, we benefit when our friends and acquaintances when they become successful. If your friend doesn’t become a king, you won’t become a friend of a king.


The quote below ends this piece:


“The problem is adjusting expectations so that your psyche survives long enough for you to be around when the big winner appears. The majority of traders quit simply because expectations and reality are out of alignment.”– Chris Tate





Aug 15, 2015 11:21 am
Champ User

帖子: 711
入会日期: 17/05/2011

If we follow all a set of rules then leverage isnt bad thing.. But I have seen that leverage is important only when you are beginner or low-cash trader. There is no point in using insane leverage levels when you are a pro trader with decent investment.

So leverage is not bad but, what I have observed is that, the traders who use leverage and consider it an important part use it due to greed and that leads to blown accounts.

Aug 19, 2015 01:45 pm
Hennon User

帖子: 5
入会日期: 17/08/2015

I don't think there exist bad things in trading forex at all

Oct 18, 2015 09:08 pm

帖子: 227
入会日期: 05/06/2015

Leverage is definitely not the bad thing, but it comes with plenty of risk as well. The person who is able to manage all these things well will always help us get success, but has the power to take our life as well, so if we control this well then we can easily convert low investment into great money. I am currently using leverage of 1.500 with OctaFX broker; it is a really incredible company which really makes us feels so good about everything especially my low investment, it is seriously helpful and allows me to be successful while when I started with this leverage I ended up with massive losses, but then I learned to handle this which boosted me big time.

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