Is 400:1 leverage better than 100:1?
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Thread: Is 400:1 leverage better than 100:1?

  1. #1
    . . .here's why I pose such a question, the cost to trade a place on a 400:1,
    at 10,000 units is $48.65, in comparison to 100:1 postion at a cost of $194.61 into
    trade.

    . . .is there some reason why a high leverage would be more cost effective to trade?

    . . .can anyone clearify this for me?

  2. #2
    Quote Originally Posted by ;
    .. .here's why I pose such a matter, the expense to trade a place on a 400:1,
    at 10,000 units is $48.65, compared to 100:1 postion at a price of $194.61 to
    trade.

    . . .is there some reason why a large leverage could be cost effective to trade?

    . . .can anyone clearify this for me?
    It depends upon exactly what you mean by better. I have a GBP mini demo. At 200: 1 leverage 1 lot represents #50. At 50:1 leverage, 1 lot represents #200. The leverage does not make any difference if I am just trading one lot, besides I would get a margin call at #50(a lot) with 200:1 leverage but at 50:1 leverage the margin call would be at #200 (per lot)Additionally, I could earn interest at 50;1 leverage, but not at any higher leverages.

    The difference stems, if for instance you traded four lots.At 200:1 leverage, your risk, is four times as much (4lots of #50) than in case you exchanged you lot at 50:1 leverage(1lot of #200).Your potential profits will also be multiplied by four with a 200:1 instead of a 50:1 leverage.

    Thus, if you're trading properly a higher leverage will help you get rich quicker. I f you're trading a leverage will lose you your money.
    If you're trading correctley, a decrease leverage will help you get wealthy more slowly,
    if you're trading incorrectley,a decrease leverage will permit you to hang on to your account that bit longer.
    Have a think about it, and good luck. Hope I have been of help.

  3. #3
    High leverage is the #1 cause of traders losing their money. I STRONGLY advise that you never exchange any over 10:1, no matter how much money is on your account.

  4. #4
    ...I get the image. . .thanks.







    Quote Originally Posted by ;
    It depends what you mean by better. I have a GBP mini demo. At 200: 1 leverage 1 lot signifies #50. At 50:1 leverage, 1 lot signifies #200. The leverage does not make any difference when I'm simply trading one lot, besides I would find a margin call at #50(per lot) with 200:1 leverage but at 50:1 leverage the margin call will be at #200 (per lot)Additionally, I could make interest at 50;1 leverage, but not at any greater leverages.

    The gap stems, if for instance you exchanged four lots.At 200:1 leverage, your risk, is four times as much (4lots of #50) than if you exchanged one lot at 50:1 leverage(1lot of #200).Your potential profits are also multiplied by four with a 200:1 rather than a 50:1 leverage.

    So, if you're trading correctly a greater leverage will get you rich quicker. I f you're trading a greater leverage will lose you your cash more quickly.
    If you're trading correctley, a decrease leverage will get you wealthy more slowly,
    if you're trading incorrectley,then a decrease leverage will permit you to hang on for your account that little longer.
    Have a think about it, and decent luck. Hope I have been of help.

  5. #5
    Greater leverage allows you to open more rankings. Sometimes this is helpful. Like in an EA.

    As with everything it depends on what you are attempting to perform.

    Occasionally lower leverage is good because the margin call happens quicker, which means you save a larger part of your account from ruin.

  6. #6
    I use 1:500 but with tight stp reduction, just in case...

  7. #7
    Quote Originally Posted by ;
    Greater leverage allows you to open more positions. Sometimes this is useful. Like in an EA.

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

    Sometimes lower leverage is good because the margin call happens faster, which means you save a larger portion of your account from ruin.
    Okay, this is perplexing, could it be you got this backward?

    You mean lower leverage allows you to open more positions??
    No wait, I suppose I would use less of my margin using greater leverage, therefore I am able to open more positions...I wonder if I actually get that...

  8. #8
    Quote Originally Posted by ;
    High leverage is the #1 reason of traders losing all their money. I STRONGLY advise that you never exchange any over 10:1, however much cash is in your account.
    This is some interesting info I was studying about Hedge Funds and leverage. . .can't recall the source so I cant quote it but it was something similar to that...

    The typical hedge fund that uses leverage (not all do) use between 2 to 5 and 1 to 1. I think that the exact average was something similar to 2.4 to 1. The article stated that in very rare cases some used 15 to 1.

    Additionally, it noted that when Long Term Capital Management collapsed it was leveraged as high as 45 to 1 that was considered dangerously excessive.

    The typical retail FX broker provides their customers leverage anywhere in 50 to 1 to 400 to 1 luring individuals with the possibility of taking huge positions by posting small margins. In most cases due to constraints on available capital this compels new traders to need to exchange with tight stops and the majority of us know that stops get hit.

  9. #9
    Quote Originally Posted by ;
    Ok, this is confusing, is it you got this backwards?

    You mean lower leverage allows you to open more rankings??
    No waitI guess I would use less of my margin using greater leverage, therefore I am ready to open more positions...I wonder if I ever get that....
    Yes greater leverage = lower margin. Therefore the margin you need to put up, the more positions you may open at a one time.

    This is not necessarily wise, but it is the way many EAs work.

  10. #10
    High leverage = High profits = High risk = Large lost

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