Does anyone have any suggestions on a leverage limit?

Many FOREX brokers allow up to 200:1 leverage. My trading strategy is to take just very small gains (3 or 4 pips at a time) and set the stop losses way out there just to avoid a total wipeout. I never trade on Fridays either and of course close out before the market closes.

Because of the giant stop losses, I am only comfortable with around 20:1 leverage or maybe 30:1.

In other words, with a $500 margin account balance, I would only consider buying 0.1 lots of EURUSD (10,000) at a time; 0.2 lots with $700; 0.3 lots with $1100 and so on...

Does anyone out there use the same strategy as me and feel comfortable with higher leverage like 40:1, 50:1 or even higher?

Answer
As you indicated, it is not just your leverage that you need to take into account...it is also your margin level that is important.

When I am drawn back to my technical analysis days I usually use a leverage of 40:1 unless I have a high probability setup occurring (based on pivot points and fibs). In that case I might go as high as 100:1.

Currently the majority of my Forex activity is based on conservative hedge trades (usually hedging the EUR/USD and USD/CHF). With my hedge trades I use a leverage of 400:1 and a margin of 10%. Hedging is awesome because the position can make profit regardless if the market goes up or down. I also get paid a daily interest payment, 7 days a week.

I have an analysis of the daily performance of 5 different hedge strategies over the past 500 days if you would like to see it. And these were all at 400:1 leverage and never anywhere near a margin call.

Paul

What are trading stocks, forex, and broker?

Can anyone who knows:

What is trading stocks and how to make money with it?

What is forex and is that related to trading stocks?

What is broker and the same questions above?

Can we absolutely make money with those?

Answer
Hi Dynasty,

Stock trading meaning if you think that for example Facebook share price will rise from current price say USD$20 and let say the next five days, the price will go up to USD$40, depending on how many shared you have purchased, say 50 shares and if you decided to liquidate it, you will make $20x50=$1000 and of course if let say the price will to drop to USD$10, then you will lose $10x50=$500.

Forex trading is trading on currency pair such as the most popular pair EURUSD and if tomorrow Germany will to announce that they will get out from EURO Zone, and if you know the information beforehand, you can short 1 standard lot, meaning 1 pip=USD$10 on EURUSD and take profit at 500 pips, you will make a profit of 500pipsx$10=$5000 within hours.

Of course both investment tools can make money only if you know how to take care of your money management to reduce your risk to the lowest. Actually in my personal forex blog, I did write something about money management on how to limit your risk if you are wrong of your trade.

Broker is platform that you need it to buy and sell your stocks or currency pairs (Forex) and they will take commission from every trade that you have transacted. If you want to try it out, you can apply for a Forex demo account to have a feel on what is Forex trading all about and try to read up Forex trading from babypips.com or my blog. In any case, it is all Free so take full advantage of it.

Absolutely can make money provided you can control your own psychology and have a sound money management to control your risk per trade.

Best Regards
Ah Kiat