400:1 - Dangerous -

[MickMason]

Originally Posted by Qazpur

i would suggest the casino - at least you get free drinks while losing your money.

LOL

....and a hot waitress!

[gabroo_munda]

400:1 leverage ain't bad............it depends how you use it. its like a knife.....give it to a child..and he'll kill himself........give it to a pro..and he'll kill the market.


Gabroo

[eagleeye]

Here's an unscientific poll -

Read the responses to the question of 400:1 leverage

See how long the people have been registered with MoneyTec

Notice how the longer the person has been around the more "conservative" they are with regard to leverage

Notice how recent the members argue that 400:1 isn't bad and convincing themselves of that argument (cars kill people and take you to the store ...yadda yadda yadda)

Then draw your own conclusion.............

[gabroo_munda]

eagleeye is absolutely correct...i am a newbie. he truly has an eagle eye ...that comes from the fact..how he judges posts. i think leverage is a powerfull tool. mayb an example can clarify a few things..and might help me understand also.

suppose you open an account with $5000. you want to trade 1 lot (100,000) of EURUSD. to clarify leverages...we won't be using the concept of risk management..which states that never bet more than 2%-5% of your account.

using low leverage

current rate = 1.1900
leverage = 50 (this is still high according to some standards)
amount + margin needed for this trade = ((100,000 * 1.1900)/50) => $2380
5000 - 2380 = 2620 (262 pips)
so your maximum drawdown (streak of loosing trades) can be 262 pips before a margin call
risk = if your position goes -30 pips...u lose = $300 + spread

using high leverage

current rate = 1.1900
leverage = 400
amount + margin needed for this trade = ((100,000 * 1.1900)/400) = $298
5000 - 298 = $4702 (470 pips)
so your maximum drawdown (streak of loosing trades) can be 470 pips before a margin call.
risk = if your position goes -30 pips...u lose = $300 + spread

so as you can see....the risk in both cases is the same $300, but using high leverage..our buffer for loosing trades (drawdown) is larger as we have to loose 470 pips (compared to 262 pips) in order to reach bankrupcy (ofcourse we'll get bankrupt before that..because after lossing trades..we need some money for buying and margin in the account to trade further, but u get the point). so money worth 470 pips in your account is better than money worth 262 pips..as the former will keep you in the game longer.

high leverage is dangerous...if you start with $500 account and then want to trade at 400:1 leverage...because then one bad trade will wipe you out.

i might have made some mistakes in this examples as i have assumed some things..and taken account risk (2% - 5%) out of the picture. also i have assumed that money management practise does not exsist....which will suggest you too decrease your exposure in a losing streak. i might be right..or might be absolutely wrong. please correct me as you think right.

regards

[snow]

Its a marketing ploy to suck in the newbs.
Its easy money for the brokers ...and me!
Meet me in the markets , im gonna take your cash

[eagleeye]

Originally Posted by snow

Its a marketing ploy to suck in the newbs.
Its easy money for the brokers ...and me!

Hey there snow why is excessive leverage money 4 U? Are you secretly a broker in disguise?

Originally Posted by snow

Meet me in the markets , im gonna take your cash

Nobody likes school yard bullies

Play nice and smile as you take their $ - it's so much nicer

Besides most people will willingly "give" it to you - lack of experience, knowledge and insight but hey, that's what makes the world go round!

[fastbusiness]

Ok, to be honest, I expected answers like "DON'T EVEN THINK ABOUT DOING THAT". And yes, you are probably right. For a newbie this leverage can be extremely dangerous. Personally I like scalping. Taking few pips, few times a day that’s my style. And it works pretty fine for me. The only problem is spread, and that’s why people think scalping is a loser strategy. I'm using big O when trading (but just demo for now) because of low spread, and I'm able to make 15 to 25 pips per day without a big problem. But when you face 3 pip spread, than scalping is not an option. Here is the example of how would I use this "super crazy" leverage: We all know that Nonfarm payroll shakes market pretty well, so when it does even a newbie can make at least 20 pips. I mean all you have to do is wait and when market forms its direction, simply get in. But it’s not the only event on which you can profit. Big moves happen all the time, you just need to know when to be ready to take a ride at its very beginning.

"400:1 leverage ain't bad............it depends how you use it. its like a knife.....give it to a child..and he'll kill himself........give it to a pro..and he'll kill the market."

That’s right.

I think that the trickiest part is to use 400:1 only when you are 100 % sure that you are doing a right thing, and it's not a leverage that I would be using for normal trading (set 40 pip target, 20 pip stop loss and walk away (and when you get back it will be like: I swear I left it with 5000 $ in it!)).

I'll respect your advices, but if I ever decide to open 400:1 account I'll do it with just 50 $.

Until then I'll continue trading my demo account at big O, and hopefully, very soon, open a real one.

[eagleeye]

Originally Posted by fastbusiness

Here is the example of how would I use this "super crazy" leverage: We all know that Nonfarm payroll shakes market pretty well, so when it does even a newbie can make at least 20 pips. I mean all you have to do is wait and when market forms its direction, simply get in. But it’s not the only event on which you can profit. Big moves happen all the time, you just need to know when to be ready to take a ride at its very beginning.

When you switch to a "real account" and get frozen on your first market order lets hear from you then on NFP day. How about on December 2? What happened then? The number was just as expected and the market did what? NOTHING - until 0845 when it spiked frm 7283-7379. So then you finally get a long position arond 7360-7370 and think you're pretty hot until 0920 when cable drops from 7343-7295 in 5 minutes.

NFP days are wild and crazy and NOT the place to be playing with 400:1 leverage!
[quote=fastbusiness]
I think that the trickiest part is to use 400:1 only when you are 100 % sure that you are doing a right thing, and it's not a leverage that I would be using for normal trading (set 40 pip target, 20 pip stop loss and walk away (and when you get back it will be like: I swear I left it with 5000 $ in it!)).[quote]

Never mind me, roll those dice and shoot for craps!

When will people realize that this is a BUSINESS and NOT a casino? I guess charts with up=green and down=red look too much like a roulette wheel

Hey Fastbusiness just keep a log for our entertainment will ya?