Can you choose what leverage to use before each trade?

Discussion in 'Forex' started by nwoptions, Aug 17, 2020.

  1. xandman

    xandman

    I haven't heard of a broker that does it by trade. Oanda may allow it by sub-account but not at the granular level that you want.

    It would be much simpler to earmark more capital to the trade, visualize the move in play and position size accordingly. These are all dimensional factors that should be in your head anyway. The calculations are elementary. But, you will have to periodically re-adjust.

    The biggest factor you should be thinking about is the magnitude of the move for the given time frame...just like options.
     
    Last edited: Aug 17, 2020
    #11     Aug 17, 2020
  2. Tradex

    Tradex

    Call your Forex or Futures broker and tell him you want 4 to 1 leverage on the next trade.
    He will probably laugh hysterically because the request does not make any sense.
    (Don't try this at home folks, this is just an example.)

    You can however ask him to lower your leverage permanently (from 100 to 1 to 25 to 1 for instance).

    It is an unusual request but it is doable, if you have a good relationship with your broker (just keep in mind that now you have to pay 4 times more margin money per contract/lot).
     
    Last edited: Aug 17, 2020
    #12     Aug 17, 2020
  3. jys78

    jys78

    Yes.
     
    #13     Aug 17, 2020
  4. xandman

    xandman


    I think you are the only one who can't accept the concept that you earmark capital to a trade to lower your effective leverage. I have nothing more to discuss.
     
    #14     Aug 17, 2020
    virtusa likes this.
  5. maxinger

    maxinger


    Simply adjust the quantity to suit your personality, your trade plan
    and that particular product
     
    #15     Aug 17, 2020
  6. Tradex

    Tradex


    Leverage is a loan given by your broker, period. It has a fixed value and you cannot "lower" it no matter how you trade.

    This is the true definition of leverage, a loan that will allow you to magnify your winnings, if your trade is profitable.

    If your broker gives you 100 to 1 leverage then you are using a 100 to 1 leverage, even if you allocate 0.00000001% of your capital to your position.

    Leverage has absolutely nothing to do with your capital or the size of your trades.
     
    #16     Aug 17, 2020
    nwoptions likes this.
  7. xandman

    xandman

    Bah!, Fabozzi!
     
    #17     Aug 17, 2020
  8. savoir

    savoir

    Ever hear of a performance bond? Clearly, leverage is not always a loan from the broker.
     
    #18     Aug 17, 2020
  9. maxinger

    maxinger

    I know it sounds ridiculous;

    how nice if I can increase the leverage.
     
    #19     Aug 17, 2020
  10. (a) Leverage is the ratio of your GMV to your capital at risk. The upper bound is dictated by your broker, clearing firm or risk capital (depending on where you are). The lower bound is zero, assuming you are carrying zero risk. Anything in between is up to you.

    (b) Of course, you can change leverage by changing the amount of capital. For example, someone who has 169k in his account and carries one spoo has no leverage. Someone who has 85k and one spoo is leverage 1:2 etc. The fact that E-mini have much higher inherent leverage is irrelevant.

    (c) Leverage and risk are related, but not identical. For example, a boxed position could consume a lot of leverage while carrying very little risk.

    (e) Sources of leverage can vary from broker (in form of a margin) to your clearing house (again, by setting margin on specific products) to your prop firm (borrowing money from outside) etc. Sometimes you get to mix them - e.g. someone can be trading spreads on the exchange (highly leveraged) while using his first-loss provider for part of the margin.

    (f) Go ahead, scream all you want.
     
    #20     Aug 17, 2020