Does it make sense to raise leverage if a trading strategy is low volatility?

Discussion in 'Strategy Building' started by helpme_please, Sep 6, 2015.

  1. IAS_LLC

    IAS_LLC

    I respect your opinion on all of this, but what is the difference in buying $100k worth of a security that has a 5% average daily volatility on no leverage and buying $100k of security that has 0.5% volatility at 10x leverage? The way I see it, you are putting ~$5k 1 Sigma at risk either way (obviously tail risk need to be accounted for too). I'd rather use the remaining $90k in my account to diversify in other leveraged securities, instead of having money that isn't getting any exposure (I'm talking intra-day trading, not investing). Obviously with leverage you have the risk of losing more than the $10k you put up, but that is what hedges, stops, and diversification are for.
     
    #21     Sep 7, 2015
    Rimping likes this.
  2. IAS_LLC

    IAS_LLC

    I meant interday in the previous post, not intra
     
    #22     Sep 7, 2015