The TRUTH about LEVERAGE - Forex Trading

January 11, 2016

There is a lot of debate amongst traders about whether leverage in Forex trading is a good thing or a bad thing. In my opinion, leverage is not just a good thing but an essential thing. Obviously risk and money management, with a dose of common sense, is needed when trading with leverage.

 

What is leverage?

 

Leverage enables traders to trade with margin, basically allowing you to hold positions with a small percentage of the actual position size. With leverage I can hold £100,000 positions with as litlle as £1,000, resulting in very large profits (and the risk of very large losses!).

 

How do I trade with leverage?

 

In Forex trading, leverage is usually provided by a Forex broker. Most brokers offer anything from 1:2-1:100 leverage (50%-1% margin). Some brokers offer up to 1:500 leverage (0.2% margin). There is usally a financing charge for using leverage.

 

Why is leverage needed in Forex trading?

 

Leverage is needed in Forex trading as currencies are not volatile enough to create substantial profits, especially with small retail accounts. The video below explains this in much more detail...

 

 

Leverage is a killer!

 

Some believe that leverage is very dangerous when trading Forex and that an absolute minimum of leverage should be used. I personally believe that position sizing and strategy are key, no matter how much leverage you may be using risking 1% per trade is a key to trading survival, having a strategy is key to profitability, leverage is just a means to enable us to trade.

 

If you have found this post useful, please check out my Forex Trading Signals, Forex Price Action Course and my Forex Mentor Program.

Please reload

Subscribe for Free Updates (includes mailing list)

  • Grey YouTube Icon
  • Grey Instagram Icon
  • Grey Facebook Icon
  • Grey LinkedIn Icon
  • Grey Twitter Icon
  • Grey G+ Icon

© 2015-2019 love-the-pips

DISCLAIMER

 

*There is a very high degree of risk involved in trading. Past results are not indicative of future returns. Samuel Morton, love-the-pips.com and all individuals affiliated with this site assume no responsibilities for your trading and investment results. The indicators, strategies, columns, articles and all other features are for educational purposes only and should not be construed as investment advice. Information for Forex trading observations are obtained from sources believed to be reliable, but we do not warrant its completeness or accuracy, or warrant any results from the use of the information. Your use of the trading observations is entirely at your own risk and it is your sole responsibility to evaluate the accuracy, completeness and usefulness of the information.You must assess the risk of any trade with your broker and make your own independent decisions regarding any securities mentioned herein. Affiliates of Samuel Morton and love-the-pips.com may have a position or effect transactions in the securities described herein (or options thereon) and/or otherwise employ trading strategies that may be consistent or inconsistent with the provided strategies. Trading Forex, Options on Forex, and any retail off-exchange foreign currency transactions involves substantial risk of loss and is not suitable for all investors. You should carefully consider whether trading is suitable for you in light of your circumstances, knowledge, and financial resources. You may lose all or more of your initial investment. Opinions, market data, and recommendations are subject to change at any time. Samuel Morton and love-the-pips.com is not an investment advisory service, is not an investment adviser, and does not provide personalised financial advice or act as a financial adviser. love-the-pips.com exists for educational purposes only, and the materials and information continued herein are for general informational purposes only. None of the information provided in the website is intended as investment, tax, accounting or legal advice, as an offer or solicitation of an offer to buy or sell, or as an endorsement, recommendation or sponsorship of any company, security, or fund. The information on the website should not be relied upon for purposes of transacting securities or other investments. You hereby understand and agree that Samuel Morton and love-the-pips.com does not offer or provide tax, legal or investment advice and that you are responsible for consulting tax, legal, or financial professionals before acting on any information provided herein.

*All trading products and services are non-refundable.  It is hardly fair to process refunds just because you change your mind after receiving materials and the education. Just as Amazon.com and iTunes, we do not offer refunds for digital products, there are NO refunds on any digital products offered on this site. Past results are not a reflection of future gains. We strongly advise that you risk no more than 1% capital per signal provided. We cannot be held responsible for any technical or other difficulties that may result in signals not received or followed. Our Mentor Program is non-refundable upon the start of the first training session. Our time is priced at £250.00 per hour, the mentor program offers 2 paid hours with the remaining program free of charge. Read our main disclaimer a. Our Advanced Price Action Course is non-refundable once the purchaser has logged-in.

lovethepips.com/forexcfdsignals is dedicated to learning profitable Forex price action trading