What leverage should be good for a newbie to use?

Discussion in 'Forex' started by Coner1980, Oct 9, 2020.

  1. Should be trading Sim at first... until trader has a "workable plan" in his mind.
     
    #11     Oct 9, 2020
    KCalhoun, bone and algoseek like this.
  2. algoseek

    algoseek Sponsor

    That is even better.
     
    #12     Oct 9, 2020
  3. AbbotAle

    AbbotAle

    Don't focus on leverage, focus on potential loss per trade.

    If you're anywhere but the US, you can trade micro lots, with a 10-20 tick stop you'd be looking at a few USD in losses when wrong. Continue to trade that amount till you get constantly profitable, bearing in mind that can take years...
     
    #13     Oct 9, 2020
    murray t turtle and KCalhoun like this.
  4. AbbotAle

    AbbotAle

    And as others have said, it's a good idea not to risk any money so use SIM trading at least for the first few months.

    Many say SIM is no good because no money is on the line. That's true to a certain degree but then why do pro sports people practice the whole time when there's no pressure? The reason is obvious and it should be likewise obvious with trading SIM.
     
    #14     Oct 9, 2020
  5. Snuskpelle

    Snuskpelle

    Risk 1% of account per trade. The stop loss determines what leverage you will want on the trade. Nonetheless, please cap the used leverage to a maximum you're comfortable with. Stop losses can be gapped through during extreme events and leverages above 10x can have very ugly consequences. To be clear, it's instrument dependent. If you are trading crude oil, even 2x overnight is plenty...

    Look up historical extreme events, for instance what happened to traders in CHF. From there you should have a good idea where my numbers come from. Or, as many do, you can completely disregard what could happen and settle for a random lottery like outcome where if you were lucky you survived long enough to make a big account...
     
    Last edited: Oct 9, 2020
    #15     Oct 9, 2020
  6. The primary benefit to Sim is to show things that do not work.... then, back to the drawing board. Even when you have something that appears to work in Sim, it may not work with real money... as real financial risk carries other variable a trader needs to learn about. Therefore, once you transition to real money, trader should "go slow... trade small". There's plenty of time to make a LOT of money, but only if you trade well. Gotta learn that first.
     
    #16     Oct 9, 2020
  7. deltaf0rce

    deltaf0rce

    Leverage in forex is great, sounds counterintuitive right. But think about what other market can you put 100 in the account and see pnl real enough that you pay attention and learn to trade. Real money emotional experience at the same time virtually no real risk because it’s $100. Liquid enough to have a stop in place to keep you from going negative.
     
    #17     Oct 9, 2020
  8. Snuskpelle

    Snuskpelle

    The risk is you do well for a while, and grow your account from say $100 to $10k, then hit a tail event and end up in the negative. As long as you realize the absolute sums at stake and reduce leverage accordingly, it's fine though. Most likely that $100 lottery money will be gone before any of that happens however.

    If you're going to take a lottery approach, why not buy OTM call options? A lot safer. That's what the WSB guys are actually getting right.
     
    #18     Oct 9, 2020
    murray t turtle likes this.
  9. Turveyd

    Turveyd

    To be fair, it goes quick, Trading is a great way to make the time go really fast.

    Watching charts live is like the hypnotoad, 6 hours goes by, without doing anything at times.
     
    #19     Oct 9, 2020
  10. It depends on the volatility of the trading pair and your stop loss.
     
    #20     Oct 9, 2020