overleveraging

[Ara]

During which market conditions or scenarios is overleveraging more common? How can traders protect themselves during these times?

 

[M.Joey]

During which market conditions or scenarios is overleveraging more common? How can traders protect themselves during these times?

It’s always better to avoid overleveraging but if you find any strong support or resistance level from where the market is more likely to return, you can use overleverage in that case but the order must be tied with higher stop loss.

 

[Enivid]

What do you mean by 'overleveraging'?

 

[Ara]

What do you mean by 'overleveraging'?

Using a high leverage.

Post automatically merged: Sep 20, 2023

It’s always better to avoid overleveraging but if you find any strong support or resistance level from where the market is more likely to return, you can use overleverage in that case but the order must be tied with higher stop loss.

It's all about finding that balance between risk and opportunity.

 

[Enivid]

Using a high leverage.

Then your question doesn't make much sense. Why would it be more common during some market conditions? Why would someone need to protect themselves from it?

 

[Chadpowell]

I guess you have to own an answer to this question while you are building your trading system. You need to know your risk management, appropriate leverage and things like that..

 

[Ara]

Then your question doesn't make much sense. Why would it be more common during some market conditions? Why would someone need to protect themselves from it?

It does. Maybe you want to use a high leverage in some conditions but at the same time, you want to manage it.

 

[Enivid]

Maybe you want to use a high leverage in some conditions

Why only in some and not in others?

but at the same time, you want to manage it.

Manage how?

 

[fargana]

What do you mean by 'overleveraging'?

Opening a trade with a size that would wipe your balance in 20 pips, lol. I think he meant something like this.

 

[Enivid]

Opening a trade with a size that would wipe your balance in 20 pips, lol. I think he meant something like this.

Judging by his follow--up posts, it's not that. What you describe shouldn't be done under any market conditions.

 

[hayseed]

During which market conditions or scenarios is overleveraging more common? How can traders protect themselves during these times?

//----

here's a scenario ....


once, high leverage seemed important to me and in reality my control over it was low.....

now, my control over leverage is high and my need for leverage is low.....

so maybe, it has nothing to do with market conditions.....

we might over leverage when we have no control and the only protection might be gaining control......h

 

[BGoodwin]

Overleveraging is more common in bullish and volatile markets. Traders can protect themselves by setting strict risk management rules, using stop-loss orders, and avoiding excessive leverage.