Leverage

There is nothing that drives me crazier than traders looking for leverage that is higher than 10:1. Many traders always ask for 200:1* or even worse 400:1 leverage.

First of all if you are using this type of leverage your dealing firm is always going to be bucketing your trades no matter what. Most big liquidity providers do not allow customers leverage that is more than 50:1.

Other than the fact that trading with this type of leverage is a terrible idea, you will be automatically placed in the group to take risk on by the dealing firm if you choose to have higher leverage because they automatically will expect you to lose and will not be able to cleanly hedge your trades off. So take my advice, keep leverage low for many reasons. I will save most of the reasons for another guide. Next >