Leverage, lots

[nayani]

Hai,

I am a beginner..please explain me about Leverage and how much leverage is good and how can we select a best broker.I have a doubt whether depending upon leverage ,we have to select broker or not... pls explain it. and also pls explain about Lots,Lots size.

Thank u

Nayani

 

[Pharaoh]

Most brokers will default to 100:1 or 200:1. The problem is that they are giving you a car with a racing engine and turning you lose during rush hour downtown. If you push the gas pedal to the floor, the odds of a crash are VERY high.

I have a simple method - Don't waste time thinking about leverage. Think about risk percentage instead. That's the percent of your account that you will lose if the trade goes straight to your stoploss.

I've got an article on this subject posted here:
https://www.forexpeacearmy.com/fore...2272-how-manage-risk-while-forex-trading.html

I think you'll find it useful.

 

[sarlayan]

Broker give a huge leverages to customers. But you can decide to use the ratio you want. Assume the leverage is 1 :100, if there is a small change in currency (%1) than you are to loose everything in your hand. This is approximetely equal to 140 pips in EURUSD.
In my opinion and in my strategies I try to use 1:10 leverage and maximum 1 : 20 but as I mentioned it depends on your expectation

 

[Nancy Cheah]

I trade on a 100 leverage but I always cautioned myself that leverage is actually a double-edged sword.

 

[nayani]

thanks

Thank you very much Pharaoh, sarlayan and Nancy Cheah

 

[Nancy Cheah]

You're most welcomed.