Resolved Question
Its is about leveage
Please, i want you candid advise on this matter.i opened a live account(min account) for $7000 with my broker and they gave me a leveage of 1:200. what will be the effect if i trade the account with the leveage of 1:200 or decide to trade it with 1:100?out of these two leveage 1:200 and 1:100 do you advise me to use on a min account of $7,000?
about 1 year ago
Best Answer - Chosen by Voters
The higher the leverage, the higher your risk/reward will be. It is better to start with 1:100 than 1:200. Your winnings may be lower but your losses will be lower, too. I also suggest that you refrain from withdrawing any winnings so that your capital will grow. Read more on links I shared to you.
about 1 year ago
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Answers (2)
Leverage is a double edged sword.Leverage allows you to trade big with less amount on the table as margin.Hence, it is just a ratio. That is all. If you want to know how correctly trade your $7K account, you need to have a plan with concept such as risk management, money money management, risk and reward.
about 1 year ago
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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
about 1 year ago
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