Forex Leverage Explained For Beginners & Everyone Else!

Forex Leverage Explained For Beginners & Everyone Else!

In this Forex trading vlog, I discuss a question I frequently on the ideal leverage in Forex to use. Vlog #236.

Many people get interested in Forex trading when they hear the word "leverage". Leverage is marketed by some brokers as a way for traders to make money.

I don't see it that way...

"What is leverage in Forex trading?"

I see leverage as a tool that's allowing me to execute my trading plan properly.

It helps you to take more trades than you could only with your own money.

So what's the ideal Forex leverage for beginners?

It's going to be a specific answer for every trader. In short, you must understand what leverage allows you to do as a trader and to what extent you need it.

If you take a single trade in a year, chances are you don't even need leverage.

However, as a day trader or swing trader, you'll often be in a situation where you need to enter multiple trades. Increasing the leverage in your account will reduce the margin requirements (what you need in your account to enter a trade).

Now, ask yourself how many trades you've taken at the same time. Ensure that the leverage setting in your account will allow you to take that number of trades at the same time.

If so, you're good to go! The issue of the ideal leverage for Forex beginners is fixed!

// Music

// About Me
My name is Etienne Crete (from Montreal, Canada). I'm a swing Forex trader and help aspiring Forex traders develop a trading method that works for them so they can produce income allowing them to live with more freedom.

What you must know: I'm all for trading foreign exchange, but I think freedom is much more important than time spent in front of your computer.

If you truly want to succeed in Forex trading, I believe you need to keep working on yourself so you can improve your strengths, but also your weaknesses. Do not focus solely on what you're good at.

// Disclaimer
This video expresses my personal opinion only. Forex trading is risky. Make sure you are ready to trade. Even this will not guarantee you positive results. I am not responsible for any losses incurred due to your trading or anything else. I do not recommend any specific trade or action.

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// All Products Used In This Video
Editing software: Final Cut Pro (Mac)

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[TheNytmarez]

het Etienne, am a big fan.I had a couple of questions.I'll try and be short and direct.So, if we use the example you used with a leverage of 30:1, and buy 1000units, 1 micro lot, the results you got are 40usd as required margin.Does that mean that the 40usd should be 1-2% of your account, as in one trade or does it mean that the maximum loss in say 4 or 5 trades is 40usd since the leverage is often set as a max.

[deliagrowen]

Bro after watching so many videos out there this is the most accurate. Because people think they will earn more money with leverage when in fact it is there to control the risk. Thanks bro.

[Hskh]

For anyone who still doesn't understand, leverage allows you to borrow from the broker to risk more which potentially can make you more money or lose more money.

[tombinueza]

hello, i am tom. I plan to invest $1, 000 in forex. I plan to take 10 trades in a day with a risk of 50 pips per trade (or risk is 500 pips per day). What leverage do you advise I will take and what lot size per trade if I take 10 trades a day? Supposing I win about 150-200 pips a day, how much money will I be making and at what leverage?

[FXPips]

Im a high leverage trader myself. But i also have great confidence in my methodology. No room for error. Maybe someday, you will hear my story. A goal for 2018

[josephan]

So if i have $100, and i use 30:1 leverage, id be able to trade $3, 000. If i were to win $100 on a trade, would i have essentially doubled my money? Or would i only win a portion of that $100, depending on the leverage?

[Prosper_Pun]

Is leverage borrowed money? (Loan 🦈) Just wanna trade what I put in. How do I make should I do that?

[LowJackAP]

@Etienne Crete - Desire To TRADE I don't understand. So if you use leverage to increase your investment that basically means you barrow the money and have to give it back after you sell. But what happens to your return, do you get to keep it and only pay back what you barrow? also what happens if you lose on the trade?

[davidilabija]

What are the pros and cons of 1:1000 leverage on a 50$ account

[azalzahrani]

Etienne Crete - Desire To TRADE

Many thanks for your videos comments and advises. I am new trader i want to get it right and be on the safe side as much as possible.
I have a Q. About Leverage i got the idea, but just to make sure i got it right.
So if a capital was 100 dollars got 10X leverage, lose 10% that should be 10 dollars from the capital but actually it is 100 bcz X10 Leverage = lost all the capital.
Ok what f the lose was 50% that will b 500 dollar more than the capital. So the lose will be and must be payed back to the broker? And how? From the deposit or ... ?

Thank u again :)

[dthor]

What's the best leverage for forex and cryptocurrency trading?

[KuyaAllam]

which is better leverage for like me as newbie, 1:50 or 1:10? leverage? ty

[erangaaw]

Hi sir. Need some advice. I'm 28 and I've invested an amount expecting the stock prices to go lower (Bear Market I've brought it expecting to go lower. Reverse buy I mean) However I've brought it with very less leverage. since the market is currently on a uptrend, my opened positions are at a loss. What is your advice. Should I close the position or should I wait till the market drops since I have used less leverage? Or any better ideas sir. Await your reply.... Thanks

[sakindarbakhat]

Hello dear,
I have one question about lot size, suppose I got a good trade setup to go long



account balance = $3000
risk = 2%
stop loss = 50 pips
pip value = $10

lot size = (3000 * 0.02)/(50*10) = 0.12



Now question is, how do I know that this is
- standard lot
- mini lot
- micro lot
or
- Nano lot

hope u will answer my question.
Thanks

[muttaqinasanzida]

Leverage is one of the finest trading tools in Forex trading which always help their traders to make big profit or to lose in Forex trading. Most of the Forex traders are afraid to use the high trading leverage because it contains high risk. That’s why I choose Forex4you trading broker who give me flexible leverage 1:1000, in their platform to use. Now I can make good profit and I am able to control my risk.

[Alan-teim]

I am just starting. Someone I know is trading 500:1 leverage, which seems excessive. Is that right?

[refilwemadonsela]

Hey Etienne, Just opened an account with oanda. I deposited 77 dollars as a start I"m being super cautious because I'm a beginner, do you think 1:100 is ideal for this type of account or should I go lower?


I placed trades today and 4/6 won but I did not get any profit, is there something I am missing?


Great content by the way!

[fundamental]

I am more confused than I was before watching this video.

[reesereese]

I think it could have been explained in much better detailed...would have been better if you put it in trader term and saying how much a person can leverage with mini, standard accounts on a certain dollar amount and leverage. the picture would have been much better

[laurenaguayo]

Hey! Do you teach privately? I need help with learning leverage and calculating risk/reward