Quote:
Originally posted by benkorea
Am I commiting a suicide having a leverage higher than most of the account managers
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Yes, the more leverage used the more risk. It is related to loss ratio. High leverages can wipe your account out in short time. lets use figures:
you have 50k and have 2 options 100:1 and 10:1. assuming you will use 100% of equity ( this is imposible of course) to trade Eur/Usd :
- !00:1 you can open 50 lot. 30 pip loss means 1500 pip total and 15k loss. you lost almost 30% of equity in one shoot.
- 10:1 you open 5 lot. 30 pip loss means 150 pip total and 1.5k loss. you lost 3% of equity.
P.S. It goes both ways. meaning if you have a proven strategy with good winning ratio. It is better to use 50:1 for example to get the best return on investment
Hope I made it clear.
Hani
