The answer on "How to choose leverage?" is very simple

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2020-04-05 14:50:00

The leverage is chosen very simply at the stage of opening a trading account. Just check the box next to a certain value of the shoulder or select it from the drop-down list. This choice is the problem for most novice traders.

After all, they don’t even know what a shoulder is, and which one is better for them to choose. However, this is not only a problem for beginners. And there are traders with experience who have leaked more than one deposit, but they still don’t know what leverage is.

It should be understood that leverage makes it possible to trade volumes many times more than there are own funds. This opportunity is provided free of charge and if you understand what risks and what prospects gives leverage, then it can be beneficial.

Suppose a trader has $ 1,400 of his own funds. This is a little more than what is required to buy gold with a lot of 0.01, or one ounce. Roughly speaking, if gold grows by 2 percent, then its profit will leave about 2 percent. Leverage 1:10 will allow you to earn 20 percent on deposit on the same move. If you buy gold 10 times more, that is 10 ounces. It must be remembered that if we chose a specific shoulder size, this does not mean that someone forces us to use it to the full.

And most traders do just that. He chooses, for example, a leverage of 1: 500, but in fact they trade with such lots that they would have 1:50 with a margin. Why do traders need an opportunity that they, like, are still not going to use?

But because they are going. Because they have known for a long time and have already managed to get used to how their trade usually goes. At times, a plus, but then everything is replaced by a drawdown. And when half of the deposit is already lost, then most traders come to the conclusion that it is necessary to restore funds and preferably faster and in one transaction. Which requires a significant increase in volumes, and therefore the presence of a corresponding leverage for this.

If the majority begins to trade without the use of martingales and averaging, then their accounts will show a steady decline. And with the use of the above methods, they can go into the plus. Let often and also not for as long as we would like. And trading without big shoulders with martin and averaging is also possible, but the temporary profit will be quite insignificant.

If many traders were able to trade a constant lot size and make profit in points, then they would not need the now popular leverage sizes. Such as 1: 100 and even higher.

200 points of profit per month received by a tenfold lot in relation to the deposit, this is about 20 percent per month.

Some other traders do not like to read trading conditions. Well, or do not understand what is written there. As a result, it will not be clear to many newcomers that 1000 rubles will be sufficient for trading without leverage on a cent account. This may also be an unnecessary extreme. You can trade with a large profit with the tenth shoulder. There would be a profit, but here another thing is interesting. The fact that there are a considerable number of experienced people who are sure that 1: 100 is a small leverage and is suitable only for very large deposits. How do they think they come to such absurd conclusions? They don’t seem to consider.

But leverage can have other uses besides playing the lottery with it. The fact that the DC provides it for free allows you to keep only a small part of the money intended for trading on your account without extra costs.

So that they are only enough for a few transactions.