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Chapter 34, Part II. Overleveraging and Transaction Costs. Page 5

Discussion in 'Complete Trading Education- Forex Military School' started by Sive Morten, Dec 28, 2013.

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  1. Sive Morten

    Sive Morten Special Consultant to the FPA

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    Commander in Pips: You’re one of my best pipruits. I hope so that you will be fine. Finally, at the end of the current chapter let’s just point out important moments of leverage and how to deal with it.

    1. You have to 100% understand how leverage impacts on your assets value. So, this will let you to choose – when to use it and when not;

    2. Very often leverage just blows off trading accounts due light attitude to it or simply ignorance of it. It is worthwhile to say that this is typical not just for newbie traders but sometimes even experienced ones have fallen into such traps;

    3. The more you’re leveraged the more you have to be careful and disciplined;

    4. Brokers provide you with huge leverage, since their money comes from the bid/ask spread and very often your loss also. Hence the more often you trade with big leverage and/or big loses – all the better for them. But don’t give them a chance – try to ride leverage with no-leverage trading initially with profit. Later you will able to use greater leverage in your favor reasonably;

    5. Leverage is not a case of “Whatever is not forbidden is permitted”;

    6. Again, trading is a business – this is not a “how to be richer than Mr. Buffet in 5 days” journey. So, treat it correspondingly with solid respect;

    7. Reasonable goal setting will help you to not become fascinated by leveraging.


    P.S. This lesson was written by Sive Morten, who has been working for a large European Bank since April of 2000, and is currently a supervisor of the bank's risk assessment department. Sive's knowledge of forex market and banking industry is vast and quite complete. If you have any specific questions about forex, banking industry, or any other financial instruments, please post them on the next page and Sive should answer soon.




    Note: FPA ranks are earned in the battles against scam, not in the classroom.
     
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