Is 400:1 leverage better than 100:1? - Page 3
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Thread: Is 400:1 leverage better than 100:1?

  1. #21
    Quote Originally Posted by ;
    Thank you Yoda, but if you don't mind explaining this to me in more detail, I don't see how leverage has an effect on my stops.
    Even if I don't get it right away....
    But I love your help.
    Thank you.
    The problem with high leverage, and low margin is that: The forex just doesn't move (downtrend/uptrend) in a straight line. This means that if you have purchased a currency pair in the right direction, it will most likely go in the manner, just for a tiny bit, before it goes over all management. Your stop loss needs to be higher than those temporary spikes, or you will be stopped out of your position before the tendency heads on your closing position (either that, or there will be a margin call) In case you've got a $1000 dollar margin, with 400:1 leverage, this means that you can only withstand a 25 pip stop ($250 backs one standard lot with 400:1 leverage.) 25 pip spikes (spikes that temporarly go in the opposite direction) are extremely common in the Forex. But if you had an account with a 100:1 leverage, then you could place an order using a 100 pip stop loss. This 100 pip stop loss would cover you nicely against spikes that are unwanted that are temporary.

  2. #22
    Quote Originally Posted by ;
    I am afraid I must disagree - it is not exactly what you will likely lose on a single trade, it is how much are you going to lose through the worst drawdown you're system is very likely to suffer after a bad sequence of trades. Backtesting over many years of data will provide you an idea of the largest drawdown, which allows you to compute exactly what leverage you can manage before going when that drawdown happens.

    Trading 100:1 means that if your worst chain of trades increases a 1% drawdown - i.e a fall of state 132 pips in your gathered profit on eurusd will lose you all your funds. 400:1 equates to a 31 pip fall and you're gone!

    Or am I overlooking something here?
    I was only showing how to figure your leverage per commerce, e.g. if I'm betting X lots having a Y bankroll how much leverage do I want? I was not trying giving any information how large your risk ought to be, thats up to your own system.

  3. #23
    Quote Originally Posted by ;
    Higher leverage permits you to open additional positions. Sometimes this is useful. Like in an EA.

    Like everything it depends on what you are trying to do.

    Occasionally lower leverage is great because the margin call occurs faster, so you save a bigger portion of your account out of ruin.
    ....so with that in mind, I've calculated my risk projection, so you will
    have equal amount of losing transactions, and at the end you wind up with a low low balance, with 400:1, as well as 100:1, you'ill possess a greater balance...
    to put it differently, margin calls come earlier with 100:1. Is this is exactly what you
    have been trying to explain to me?

  4. #24
    Diallist or anybody else that can help,

    Forex Beginners Money Managment article #13 where Diallist said:

    For my own transactions, the max leverage I will ever use is 10:1 true leverage, therefore I might have opened an account with only 50:1 broker leverage, but I didn't. Rather I opened my own account with 400:1 leverage. Why would I do that if I'm never going to use that leverage? I did it for the easy reason that 400:1 leverage provides me the margin requirements. I have one system which works best with small margin requirements, so this works well for me.

    I too am trying to find a reliable broker who will not trade against me personally and allows 400:1 leverage so that I can receive the very best margin requirements. I utilize a leverage of 6:1 however would like to maintain the margin requirements as low as possible. Can you direct me in the ideal way for the broker you've used who fulfills those requirments?

    I really just don't know how you can utilize state 5:1 accurate leverage on two different platforms (a 100:1 leverage platform and also onto a fifferent 400:1 leverage platform) and have two very different margin requirements depending on the leverage dimension NOT the authentic leverage that I actually use.

    Any help Is Actually appreciated, thanks alot Beforehand

  5. #25
    Yes margin calls come sooner with reduced leverage since you must hold that (more) cash as margin. If you've got 400:1 leverage, then the margin requirement is small. In the event that you buy a margin call @ 400:1, there is not much left in the account.

    I'm not stating lower or greater leverage is greater. It all depends on your egy. I'm simply pointing out the gaps.

    Quote Originally Posted by ;
    ....so with that in mind, I have calculated my own risk projection, you will
    have equivalent amount of losing transactions, and in the end you get a reduced low balance, together with 400:1, as well as 100:1, you'ill have a greater balance...
    to put it differently, margin calls come sooner with 100:1. Is this is exactly what you
    have been trying to explain to me?

  6. #26
    Oanda is my broker and that I just have 50:1
    I wish it was atleast 100:1 but the tight spreads are more significant to me personally.

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