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Leverage risks

Discussion in 'Beginners Bootcamp' started by jake.fx, Jan 30, 2012.

  1. jake.fx

    jake.fx Recruit

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    Hello guys,

    By reading about Forex market I was wondering to start applying at it, since the advantages over stocks market seems to be huge. But, is that possible to become a successful trader using a small account through leverage? Do you really believe leverage can be used for helping small traders?
     
  2. Pharaoh

    Pharaoh Colonel

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    Leverage increases the amount of money you make or lose on each change of price. If price moves in your favor, this is good. If it moves against you, this could be very bad.
     
  3. jake.fx

    jake.fx Recruit

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    I guess using leverage still being the only way to be a successfull trader ($$$), am I right?
     
  4. Pharaoh

    Pharaoh Colonel

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  5. jake.fx

    jake.fx Recruit

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    Thank you!
     
  6. brunofrib

    brunofrib Recruit

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    I'm new to forex, and leverage is a bit strange to me. When a broker says that they offer a leveraging of 100, they say that for every $1 invested, I'll be trading with $100, but where does this money come from? From the broker itself? Or does he borrow it from someone else?
     
  7. RahmanSL

    RahmanSL Major

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    brunofrib,

    In ancient and not so ancient times, the money man is the King, Sultan, Pharaoh, etc....and they don't lend money to their subjects but would tax the hell out of them...and make them into slaves (like poor old Moses and his Israeli people, for example) where they and everything they own belongs to the Pharaoh....and, of course, these citizens don't trade forex : )

    Ok, on the serious side, you need a forex education.
    Go to top of this page and go to "Education & Forums"...chose "Forex Education Forums"...then click on "Forex Military School/Complete Education by a Pro Banker"....and the answers to your question is in "Chapter 5 - Part IV".

    Read, and understand, all the materials there and you will have a PHD in Forex Trading in...ooohhhh...5 years.....issued by the FPA and endorsed by the Pro Banker (Sive Morten) and sealed by the Pharaoh himself.


    Have a happy and fascinating forex journey!
     
  8. Pharaoh

    Pharaoh Colonel

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    Also, remember that no one will force you to use margin. If you have $1000 in your account and your broker supports microlots, you can trade 1 microlot and you'll be trading at about 1:1 leverage even if your broker allows 1:50, 1:100 or 1:1000.
     
  9. baba-boy

    baba-boy Recruit

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    Thanks for highlighting the forex military school. Its quite handy. Leveraging involves an analysis into the fluctuations in exchange rate between two different countries thus providing the investors with the highest they cab obtain.
     
  10. Pharaoh

    Pharaoh Colonel

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    Forex is trading based on analysis of fluctuations in exchange rates to try to profit from changes in these rates.

    Leverage is entirely different. It is a way of "borrowing" money in order to try to make more profits (and risk more losses) based on using a certain amount of cash to back your trades. Leverage can be used (and misused) in many trading markets besides forex.
     

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