FOREX Q&A PODCAST NOTITIES

EPISODE 8: Where do I set my leverage?

The higher you set your leverage the more margin you have to play with.
If you understand that, you understand what leverage is.

If you have your leverage set 100 to 1 or even all up to 500 to 1, these huge
gigantic trades that are completely irresponsible and at some point going to
bring your entire account down.

But at those really high leverages you could actually do them without worrying
about running out of margin.

But all you need to do is this:

§ Go into your account

§ Set your leverage at 20 to 1
§ Walk away
§ Never worry about it again

That is option 1, and that is the option that I use. I trade the daily chart and the
most amount of trades I ever had open where 6. Even when I did that I still had
a good amount of margin to play with.

Have your leverage in place first.

20 to 1, set it, forget it and your good.

Here is option 2:

If you are the type of trader that don’t want to put his entire trading capital
into their brokage account, which I can understand.

Let’s just say you have 50,000 trade capital to trade with, but you only put
25,000 into your brokage account and 25,000 in the bank.
If that is the case you will want to double your leverage and if your allowed to,
to 40 to 1.

Because the size of your trades are not changing. But the amount in your
trading account has. And you need to balance that out. And way to do that is to
move to 40 to 1.

Now again this is certainly not a bad way to go because even highly, capitalized
brokers can go under. Just as the case of FXCM.

In Januari of 2015 the Euro/Swiss Franc crashed and FXCM was on the hook for
a lotttt of money. A company called Lucedia came and bailed them out
thankfully but things was never the same.

But if FXCM would have crashed I would have lost all of my money.

So it’s also a smart option to set higher leverage. Because that’s the money of
the broker.