Hi Gcapman, The <b>DEFAULT</b> leverage on the standard 10k account is 50:1 when you open the account, but you can modify leverage amounts through www.myfxcm.com. The maximum allowable for accounts through FXCM US is 100:1. Traders can decide whether to increase or decrease their own leverage from there. I'm sure this debate will continue to the end of time ... Jason
I trade anywhere from 6 to 8 systems--mostly automated. 50:1 probably suits me fine most of the time, but I definitely prefer the "cushion" of 100:1. As I said, I don't abuse it with huge one-way (or one-system) bets, but it's still an advantage. Something like 10:1 is ridiculous. That gives the smaller trader very little chance to use a variety of systems and positions.
So when are you taking up ProfLogic's challenge, oh great one with years of institutional trading experience? My guess is that you'd even decline a scrap with me in FX. But go on with your Walter Mitty routine if it makes you feel better...
So will this new round of regulation eventually lead to rules surrounding forex trading which will kill FXCM in the US I already think that FXCM is on the decline in the UK - after the FSA is taken over the BOE
FXCM and the rest of the bucket shops are little more than electronic casino venues. One of the key ingredients to play the game is capitalization, the NFA is trying to keep the punters attached to their money a few more minutes....... higher leverage reduces risk???? Please.
Depending on HOW you are using it. Higher leverage = lower margin requirement = more room to wiggle for existing positions. So if your account have higher leverage (e.g. 200:1) but when you enter a position with size well within your risk parameter, then you have more room for the position should it goes against you. All depends on the person. =)
Its all moot if you use a sane risk-mgmt and/or positionsizing scheme, then it shouldn't matter because you will never come close to the margin call level anyways regardless of what level of leverage the firm extends to you. But in theory, if you go all-in (without stop) on a 50:1 basis, and do the same on another account on an unlevereged basis, the unleveraged account's equity can go to zero, whereas the leveraged account will have a margincall well before that. Its also a matter of how you define risk, either as volatility of equity or absolute $ amount at risk.
Again, I've explained why and how it can reduce risk. But obviously you and Imaginary Prop Trader are too shallow to understand. That explains why most of you fail at trading and spend your time complaining about brokers/vendors, too.
It's a double edged sword, only thing quicker than making money in the markets is losing money in the markets. Most need to work on preserving capital, instead of doubling down and going all in on every turn. regards,