ElectricSavant
Registered: Jan 2003
Posts: 14844 |
04-21-11 05:35 AM
southbeach4me,
Isn't it past your bedtime?
I suggest you reconsider...
Using leverage and how much you invest into a strategy or system is directly related and I feel it is very important. Some say 1:500 or 1:1000 is simply gambling. I do not agree completely.
Leverage related to capital can use a rather controversial application if one really considers the possibilities honestly.
Most traders gamble with leverage. But consider this valid point:
You need less capital in your account at 500:1. This is what it is all about. Your yield is always based on your capital. If you trade the same way on a 50:1 account vs. a 500:1 account then which account would be better?
Do you see the point?
To further expound...since there is less money at risk and he gets a margin call...it's just to replenish the account. The net comparison to trading at 50:1 is the same. If he is a loser..he is still a loser...BUT if he has an edge more leverage is the way to go...Just look at the model Prop Shops offer for professional equity traders...they would not be able to extract money from the markets without leverage and fast tools.
Drawing lines in the sand may be an unnecessary evil. So there are many traders here that are professional or experienced that will admonish you to be careful and to lower your expectations and do not gamble. But when you examine yourself and your use of leverage you may understand that they mean well, but do not really understand. There are a lot of things posted on these forums that "sound good"..but you can go deeper and examine these "one-liners" and discover for yourselves what they mean to YOU.
Quote from southbeach4me:
They'll never learn(especially the newbs) bcuz they easily get seduced by those 500:1 margins, pure suicide.....no need to call Dr Kevorkian.
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