Leverage makes large trades in the market with a tiny amount of capital in your account. Forex brokers provide leverage to take accessibility to the average investor. The majority of traders cannot place GBP 10,000 as initial deposit. When a forex broker gives a trader leverage of GBP 200 to every GBP1 deposited -200:1 – it would simply take a GBP 50 to open and control a GBP 10,000.
There are groundbreaker brokers offering high leverage. A few offer 600:1 leverage (Libertex).
Suppose your broker offers you 400:1 leverage. This would let you open an account with GBP 300, using that same amount to control up to GBP 120,000 worth of trades. The average pip size with a GBP 120,000 trade is GBP 12. If your trade lost 25 pips, your whole account could be at risk. We are aware that currency pairs can move 25 pips in less than 10 seconds.
High leverage as a trading tool
There are ways to use high leverage that bring benefits.
You may use leverage when winning a trade and wishing to add to it. When you have a trade that has progressed favorable and you want to add to it, that’s one positive use of high leverage. In fact, you just ‘leveraged your profit’!
Position trading can use high leverage.
Nuclear button: high leverage lends you control
Leverage is what makes a boring market rather thrilling. When it’s your money that’s on the line, the excitement can have ill effects. Leverage and caution go together.
Traders would have been astonished to see a 10% move in their account annually in pre-leverage days. With leverage, a trader can find a 10% move each trading day.
Usually, leverage amounts are rather high. Therefore, it is crucial for you to know that most of the volatility whilst trading comes as a result of the leveraged trade rather than from the underlying asset.
Leverage amounts:
It comes in a fixed amount that can differ with diverse brokers. Each broker offers leverage based on certain rules. Leverage amounts are usually offered in the following ratios:
- 50:1
Fifty to one leverage implies that for each GBP 1 you have in your account, you may place a trade worth upto GBP 50. For instance, when you deposit GBP 500, you can trade up to GBP 25000 on the market ;
- 100:1
This implies that for each GBP 1 in your account, you may place a trade worth up to GBP 100. A GBP 200 standard account minimum deposit would give you control of GBP 200,000. ;
- 200:1
Two hundred to one leverage implies that for each GBP 1 in your account. You may place a trade worth up to GBP 200. The usual GBP 300 mini o account minimum deposit can et you trade up to GBP 60,000.;
- 400:1
Four hundred to one leverage implies that for each GBP 1 in your account, you may place a trade worth up to GBP 400. This would work only in conjunction with a proportionately large balance.
PrimeFin credentials:
Caps solution Ltd trades under the name PrimeFin. Incorporated under Labuan laws, the company has the registration number LL16622. MB/20/0052 is the license number, and the company is regulated by the national Malaysian regulatory body, the Labuan Financial Services Authority.
Caps Solutions UK Ltd is UK registered – registration number 12734767. The latter is both a payment processor and broker website operator. Almack House, 26-28 King Street, London, England SW1Y6QW is the UK registered company’s registered address.
With PrimeFin,high leverage given to professional clients can go up to 500:1. Here, negative balance protection turns out to be helpful.
For retail clients across all account types, the leverage is 100:1. Again, the leverage provided across account types looks equitable, with 1:2 for cryptocurrencies, 1:10 for stocks, and 1:50 for indices, commodities, and metals.
PrimeFin, the digital sponsor of the Argentine soccer team, boasts of online access to 10,000+ markets globally. Read the Primefin review.
Honorable mentions
- eToro;
- Capital.com;
- Libertex;
- Skilling.
The Pro take on high leverage: less is more
Professional traders generally trade low leverage. By doing this, they protect their capital and keep their returns consistent. When you deposit more money and execute fewer trades, you are still in a safe place.
With This, less is more. Secure funds, consistently growing, are the foundations of wealth. But, unfortunately, there’s no calculable way to use high leverage to achieve extremely high returns. You can hazard that only if you have been a professional trader for quite some time.
Conclusion
You can definitely get rich with leverage forex trading. But it’s actually ‘get rich – gradually.’ There will be the wind of leverage behind your sails. These will take you far. But don’t expect your sailing shop to become an airship! Risk management and capital management in tandem with reasonable leverage can become a habit. A novice can take this habit and have decent wealth when his hair greys.