Can you choose what leverage to use before each trade?

Hi guys,

Is it possible to customize what leverage you want to use before each making each trade? For instance, for one trade, let's say I want to use 2:1 leverage, but for another I want to use 4:1.

Or can you only choose the leverage for your entire account?

Thanks

 

This is indeed an interesting question I too had asked myself recently.

 

Leverage is determined by your broker, you cannot change it. In the Forex in the USA it's 50 to 1 (maximum value, your broker may offer less, like 30 to 1).

You are probably talking about the percentage of capital you allocate to each trade. This you can control of course.

 

Of course every time you enter an order you are making that decision as per post directly above.

 

I always want to scream when I hear traders talking about "too much" leverage.

People, you CANNOT change leverage, no matter how hard you try. Leverage is a loan given by your broker so that you can buy more stuff with less money, end of story.

If you can buy a $100 000 house with $10K down then your bank is giving you 10 to 1 leverage. Same thing when you broker allows you to buy $100K worth of Euros with only $1,000, the leverage is 100 to 1.

Again, leverage does not change, it has a fixed value.

 

I have a $ 1000 account with 100: 1 leverage.
If I want to use 4 leverage on my eurusd order, I just do this calculation.
(1000 * 4) / (1000 * 100) = 0.04 lot.
If I want to use a levrage 3.
(1000 * 3) / (1000 * 100) = 0.03 lot.

 

Your leverage is still 100 to 1, no matter how much money you allocate to each trade.

You cannot divide capital at risk by total capital and call it "leverage".

"Leverage is an investment strategy of using borrowed money—specifically, the use of various financial instruments or borrowed capital—to increase the potential return of an investment"
https://www.investopedia.com/terms/l/leverage.asp

 

What is your preferred term?

 

Percentage of capital allocated to a position, for a lack of a better word.