What is Leverage in Trading? (Should you use leverage?)

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In this video, you'll learn what leverage is and whether you should use it for your trading.

💬 If you’d like to get in touch, you can reach us on social media or leave a comment on this video - we read all of them and try to respond to as many people as possible.

UNDERSTANDING LEVERAGE
Using leverage is very popular, especially for retail traders in forex and cryptocurrency markets. However, it can be risky if you don't know what you're doing. In this video, you'll learn what leverage is and whether you should use it for your trading.

[Duomoinitiative]

Hopefully you all noticed my mistake in the video! On two occasions I called it a 'micro lot' when referring to a 'mini lot'. Just to clarify:
A standard lot = 100, 000 units of the base currency
A mini lot = 10, 000 units of the base currency
A micro lot = 1, 000 units of the base currency

[adamdanmusic]

Very nice speaking skills. You kept me interested the whole time and explained the point simply. Thank you brother!

[ktoma]

Thanks my good sir, well explained! I switched from Oanda which had (like you say) 50:1 to an offshore broker where I was able to set the leverage to 1:500, initial $250 deposit with lot sizes between 0.65/0.70. Just this morning on the Euro/Dollar, I made $460 on 60 pips as compared Oanda's 50:1 where I only made $44 on 60 pips.

[Grahmahshanz]

LOL .... YOU ANSWERED ALL OF MY QUESTIONS RIGHT BEFORE I ASKED THEM... THANK YOU!!!

[ahon]

Thanks for the video, in Japan most of the broker provides 1:25 as maximum

[ForexTradingUG]

Hi there, I wish to understand why; Oh, thanks for this Video: no I dea why I'm only seeing it after 4 years. Leverage however is a bit confusing to e especially when I find the same Leverage of say 1:100 returning larger losses than the gains. When a Trade closes in Profit, it's far less than the same Trade having closed in a Loss ( Spread and all other factors constant).
Do kindly inform me on this matter.

[Finance_Alpha]

Sorry if this a stupid question in advance. So if I have 1, 000 dollars and I want to trade with 1:100 leverage, my Broker will take my 1, 000 dollars aside and now I can trade with 100, 000 dollars correct? And if I use the typical 1% rule, and I lose the entire position and lose that 1% of the 100, 000 dollar account(that being 1, 000 dollars), would that mean I've lost 1, 000 dollars on that leveraged account? So is my original 1, 000 dollars now taken from the broker? Thanks to the Master Forex Trader who can answer this question.

[tanmayhadkar]

Sir I'm using Octafx broker and XM broker. Which should I go with ??

[factsland]

Great video. Is there a way before I send any funds to my account to find out if I go for 1 lot (100X leverage) how many pips margin do I have before my position gets liquidated? Thank you

[edwinkings]

Make a video showing how to apply leverage on web trading.

[jamiesoutherland]

Very informative video as always, this has cleared a lot up for me!
Thank you!

[freddiem]

I have a question. I understand stop losses can be missed due to gaps in the market due to the activity between market closes and openings. However, has there been a situation where stops have not been triggered during the live markets? I can understand being rare however i don't want to believe that a stop loss can't be triggered in live markets.

[tsx]

What's the difference between leverage and that little (pip) box on top of the one click trading section ??

[faceyourfears]

amazing value. I had to watch the video 2x due to the jargon but i finally understand what leverage is thanks to you. Iwas just a little bit confused with the sharpe ratio stuff... could you make a video on that?, keep it up!

[jibonali]

Leverage is the most important part because traders can earn huge or little money by having high or low trading leverage from their trading partner. I am getting 1:1000 leverage which is almost very high to earn huge profit by doing Forex trading. I can use this highest ratio of leverage because my broker is very careful while using the high leverage. Many experienced traders can’t make good amount of profit because they don’t get high leverage facility from their broker.

[vertyTrades]

Can I ask a Q about Leverage. Just say I buy one standard lot at 100, 000 and I only have £1000 and my leverage is 1:100. If I loose against the trade is it ever possible with leverage that I could loose a lot more than the £1000 I invested? Ie, is it ever possible if I did the above scenario and I was loosing in a trade that I would have to pay back the broker £20, 000 or even £100, 000 if something went terribly wrong? I really understand how leverage works if it goes in the winning way, but I don't understand exactly how maximum your losses can be with leverage. It just seems to be if they are giving you 1:100 leverage, it's possible that you may have to fully pay back the leveraged amount they gave you i.e., £100, 000. I am not sure if this post makes sense but I am really confused. If you could please help

[alexsilva]

Hi!! so i have a question, let's say i have 1000 to invest how can i know when is the leverage to much? is 1:10 or 1:15 to big of a position for 1000 of investment? Very good videos, keep it strong!!!

[NeonCarlette]

Great explanation, thanks! & love the ending haha

[markcooper]

I like the 5 percent rule mainly on CFD small trade amount of 100 at 50 percent stop loss

[critiquememockme]

Thank you very much. Very informative. May I ask, If I only plan on depositing 500 USD, what volume would u recommend i start with in your opinion? Lets assume I have access to a leverage of 400:1.