CFD leveraging

[fillyerboots]

Being a bit lazy here but please indulge me!

What kind of leverage is everyone out there using? I would probably only want to use 2X in the UK, does that make me ultra conservative or is 2X common?

I know I can get up to 10X with GNI, but I assume this is not compulsory, i.e. you can choose how much leverage you can take.

Seems to me that 0.25% comm is expensive also,

Who is the cheapest comm charging CFD provider out there?

 

[wysinawyg]

What kind of leverage is everyone out there using? I would probably only want to use 2X in the UK, does that make me ultra conservative or is 2X common?

IMO you're looking at it the wrong way around. Start with how much you expect to lose and what your expected drawdown is without leverage.

e.g. if you know that without leverage your system has a drawdown of upto 30%, you might want to reconsider even X2 leverage. OTOH if your max drawdown without leverage looks more like 5% and your max loss on a trade was less than 0.5% you might want to consider anything upto 4 or 5 times leverage.

For this reason short term day trades are likely to suit more leverage as you can be pretty confident that individual losses will be small and drawdowns as a whole will be less. If you're trading the big swings over weeks/months then you may find that it isn't appropriate to use any leverage at all and that in fact you shouldn't even be using all the cash you have.

wysi

 

[stevet]

wysinawyg

100% right

leverage is your friend in trading and its how you get to make big multiples of money

but only use any leverage when you have already been consistently profitable

use the minimum leverage that whatever you trade allows

leverage when you are learning just makes it easier to lose more

 

[mark_m]

0.25% is expensive - D4F is 'free' (they take the commision in the spread which, last time I checked was about the same as other brokers doing CFDs).
You also pay/receive interest on your open positions depending on whether your short or long.
On the other hand - why not just spreadbet? The spreads on D4F are about the same and if you end up making a wad you won't have to pay tax - but that's another discussion...