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Answer:
More leverage allows you to trade larger amounts then you could possibly trade with your capital. 1:200 means that for each Dollar you put in. you receive 200 Dollars. so theory says that if you have $5000, you could take a position for 1 Million.
This is fine however the Losses are also amplified. so if you take that million dollar position and it drops 0.5%, you have just lost you money.
The important thing is to work a system with risk management, usually this should be 2% per position of YOUR Capital.
IE
2% of $5000 = $100. so if you have a loss, it must only be $100.
To get more info on risk management and making a system. babypips.com
