Traders Must Not Be Greedy With Forex Leverage
Actually, how much leverage is safe for forex trading? Questions like these often cross the minds of beginners who are just beginning to understand the dangers of high leverage. Usually, they will be stuck in a dilemma; between choosing low leverage which does not provide many trading opportunities with small capital or sticking with high leverage which is said to be risky. Although they can minimize such risks by hiring high leverage brokers with excellent skills, and you can visit http://www.cnie.org/highleverage/forex-brokers.html to hire trusted brokers with high leverage immediately.
Some sources say that the ideal leverage is one that is not more than 1: 200. However, choosing leverage can actually be more flexible than that. If you do have a rational need for highly leveraged trading, and you can combine this with careful risk management, then it is fine to use leverage higher than 1: 200.
Therefore, the key to choosing safe forex leverage is actually an adjustment to your needs and your readiness to take risks. For example, you have $ 100 in the capital and a risk tolerance limit of 1% of the balance per trade. That means you need to open a position with a size of not more than $ 10. If you follow the calculation examples in this article, then you have 3 options:
1. Choose maximum leverage of 1: 200, but open a position with micro-lots.
2. Choose leverage higher than 1: 200, and can open positions with mini or standard lots.
3. Choose leverage higher than 1: 200, but open a position with micro-lots.
Of course, the biggest advantage is in the second option. However, the risk of loss is not small. If you are not ready for a loss of $ 1 per pips and it is still easy to break trading discipline, then you should use the first option. However, if you want to maximize profits, you are experienced, and you are not easily tempted to do overtrading, then the third option can be the ideal solution.