Leverage Isn’t a Bad Thing

ituglobal

Master Trader
Apr 17, 2013
515
31
69
“The point [is] that a trader has to master their psychology to allow him or her to take many small losses, trade through drawdowns, and let winners run beyond expectations.” - Markham Gross

Some people preach against leverage because of their own faults. They use trading methodologies that ultimately make average losses that are bigger than average profits, while they should be doing the opposite. While we may find it difficult at first (the same was true of me), controlling losses and making trading decisions become very easy when they become our nature.

In order to know what leverage is in trading, plus the advantages in using it, please search for the information yourself. However, experienced traders should understand what leverage is. Leverage isn’t a bad thing- it’s irrational use of leverage that’s a bad thing.

So I recommend the use of leverage. When leverage is used with strict money management, a heartwarming balance is then found between decent profits and risk control. For example, I use a leverage of 1:100. However, I risk only 0.25% per trades: which means that I use only 0.01 lots for a $2000-account, with a stop of 50 pips per trade. With an account that’s less than $2000, I’ll recommend conversion to cents, for greater safety.

The greatest achievement in trading is controlling the treacherous statistics called drawdowns, not making profits, for profits are easy to make but difficult to retain. For example, if you made a profit of 10% in this month, you could start experiencing losses in the first and/or the second week of the next month (as it’s true of any trading approach you might adopt). A proof of your proficiency then lies in your ability to lose as little money as possible, going down by, say, 2% - 4% maximum. With this, it’s easier for you to bounce back when the strategy enters another encouraging winning streak. However, a bad trader would lose between 10% - 40% or even more, during such transitory losing streak. What’s the benefit of gaining 20% this month and losing 55% next month?

It’s a good thing to help our friends and well-wishers to be the best they can be in their trading careers – hence my articles. Directly or indirectly, we benefit when our friends and acquaintances when they become successful. If your friend doesn’t become a king, you won’t become a friend of a king.

The quote below ends this piece:

“The problem is adjusting expectations so that your psyche survives long enough for you to be around when the big winner appears. The majority of traders quit simply because expectations and reality are out of alignment.” – Chris Tate
 
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Reactions: 37riched

Callagy20

Trader
Jul 24, 2015
46
0
17
It is true that leverages are good trading instruments but which you need to be careful with. Leverages as we know are expressed in ratios as a leverage ratio of 100:1 makes you to be able to control a $100 with $1 in your account. This means that you will be able to control $500,000 with just $5,000 (depending on the margin requirements of your broker). While this sounds amazing when you are winning; but when the trade goes wrong, an over leveraged account makes it easier for your account to be blown even getting a margin call. It is best to use moderate leverages preferably less than 10:1.
 
Jun 1, 2015
23
0
17
“The point [is] that a trader has to master their psychology to allow him or her to take many small losses, trade through drawdowns, and let winners run beyond expectations.” - Markham Gross

Some people preach against leverage because of their own faults. They use trading methodologies that ultimately make average losses that are bigger than average profits, while they should be doing the opposite. While we may find it difficult at first (the same was true of me), controlling losses and making trading decisions become very easy when they become our nature.

In order to know what leverage is in trading, plus the advantages in using it, please search for the information yourself. However, experienced traders should understand what leverage is. Leverage isn’t a bad thing- it’s irrational use of leverage that’s a bad thing.

So I recommend the use of leverage. When leverage is used with strict money management, a heartwarming balance is then found between decent profits and risk control. For example, I use a leverage of 1:100. However, I risk only 0.25% per trades: which means that I use only 0.01 lots for a $2000-account, with a stop of 50 pips per trade. With an account that’s less than $2000, I’ll recommend conversion to cents, for greater safety.

The greatest achievement in trading is controlling the treacherous statistics called drawdowns, not making profits, for profits are easy to make but difficult to retain. For example, if you made a profit of 10% in this month, you could start experiencing losses in the first and/or the second week of the next month (as it’s true of any trading approach you might adopt). A proof of your proficiency then lies in your ability to lose as little money as possible, going down by, say, 2% - 4% maximum. With this, it’s easier for you to bounce back when the strategy enters another encouraging winning streak. However, a bad trader would lose between 10% - 40% or even more, during such transitory losing streak. What’s the benefit of gaining 20% this month and losing 55% next month?

It’s a good thing to help our friends and well-wishers to be the best they can be in their trading careers – hence my articles. Directly or indirectly, we benefit when our friends and acquaintances when they become successful. If your friend doesn’t become a king, you won’t become a friend of a king.

The quote below ends this piece:

“The problem is adjusting expectations so that your psyche survives long enough for you to be around when the big winner appears. The majority of traders quit simply because expectations and reality are out of alignment.” – Chris Tate
i am agree with you
Leverage it is facility from your broker, like my broker tickmill who offer max 1:500 leverage, or for example another broker like instaforex who offer 1:1000 leverage, or another awesome leverage like FBS offer, 1:2000

does not matter how high or low your leverage. still, leverage is like a knife, it can be used for cooking or killing someone

it depends man behind the knife.

So if a person is a very diciplined trader, very strict practicing only losing 0.5% per trade for example, or max loss only $20 for $2000 acc
,Whatever their leverage amount , leverage is not their problem
The problem with trading are controling emotions, controlling fear and greed lol

so even we use 1:10, 1:50 leverage, but if we cant control the emotions , we will blow our account too"

That is my opinion
 

Dmitriy Enrst

Active Trader
Mar 14, 2015
186
2
34
Never forget that working with leverage, you can easily increase your potential revenue, but also increase your potential losses
 

radex78

Banned
Nov 15, 2015
676
17
54
45
Trading without leverage, for me is very heavy, with leverage it's useful to small trader that only have small capital, some broker offer leverage high leverage, but of course as trader must strict and wisely using their margin, leverage can killing account if used recklessly.
 

jellyeb

Active Trader
Jun 10, 2015
248
11
29
Nah, there is nothing to do in forex trading without leverage, we have to wait ages so price jump enough to bring us substantial profit.
I prefer to take risk but get same increment in reward, you need to risk in order to learn, simple as that.
 

radex78

Banned
Nov 15, 2015
676
17
54
45
Currently almost broker offer high leverage 1:1000 which this is high leverage for trader, but this is also like as double edge of sword, if trader recklessly using their free margin, and always greedy in trading, this leverage will help to killing account shortly, but if any trader always safe trading low risk this will useful for them although only spent small money
 

Martin Gaptil

Trader
Mar 5, 2017
58
10
9
47
According to me , before trading with high leverage we have to know how to manage risk , mostly traders in particularly the newcomers fall a great loss by taking high leverage due to non-sense planning and zero risk management policy.
 

ashouq

Active Trader
Feb 21, 2017
167
14
34
34
New traders being unaware of the market should keep the leverage low in start because using high leverage can also blow their account.
 

Jeremiah

Master Trader
Aug 24, 2015
69
0
47
A credit shoulder is good! By itself it allows to enter the deal with a large volume. But still, what volume you enter the deal with always depends on the trader. If the trader quickly drained the deposit, then that's only the trader's fault, and not the fact that the credit shoulder was high. It was the trader that made the decision with a higher volume, and in order to take the blame off themselves - he decided that it's to blame. Anyway, what can I say - keep to elementary rules of money management and all will be ok!
 

ashouq

Active Trader
Feb 21, 2017
167
14
34
34
Money management is a part of trading business and the successful traders always give more importance to minimize all the risks associated with their invested capital.
 

SweetPrincess

Trader
May 9, 2017
117
31
24
43
You must use your leverage wisely. If you are still a newbie and do not have much knowledge in the business, then low leverage is best for you. When you have experience and proper education in the business, that is the time that you can increase it to gain more revenue :)
 

ashouq

Active Trader
Feb 21, 2017
167
14
34
34
Leverage, in my opinion, can be the best thing which enables us to make more revenue by borrowing others money and making profits on it however we should learn first how to manage this leverage wisely.
 

Ary Barroso

Active Trader
Jul 9, 2017
908
71
39
35
Trading leverage is one of the most important service for the retail Forex trader! It’s the opportunity to make handsome money! But the thing is, you have to understand first how to use high trading leverage. But unfortunately, maximum traders try to misuse this trading facility! Besides, depending on only high trading leverage is not a solution.
 

john nathan

Newbie
Sep 13, 2017
5
1
2
31
Hi all, in my opinion leverage is not bad, it just depends on the way how you use the leverage in order to earn the profits.