Leverage?

[Scotty2Cues]

Either your percent risk and stop loss determines your leverage or you can choose your leverage and stop loss to determine you percent risk.

Eg If I risk 3% of account and use a 30 pip stop loss my leverage is 1:10

LotSize * %Risk / StopSize * PipValue = True Leverage

 

[SvenFoster]

Peeps If your not going to use any leverage then why trade FX? I'm here because I can leverage.

It doesnt always mean 100x risking a fortune on the toss of a coin.

eg. if I deposit less money with my broker and more in my bank but still trade the full account? why not.

 

[meanreversion]

Either your percent risk and stop loss determines your leverage or you can choose your leverage and stop loss to determine you percent risk.

Eg If I risk 3% of account and use a 30 pip stop loss my leverage is 1:10

LotSize * %Risk / StopSize * PipValue = True Leverage

Is this right? Do you mean a 30 basis point stop loss? Pip size is variable.

 

[intradaybill]

A useful article on the subject

Margin and Leverage in Futures and Forex Trading

 

[Scotty2Cues]

Is this right? Do you mean a 30 basis point stop loss? Pip size is variable.

yeah use the formula. Choose your percent risk of account and you stop loss (in pips) and that determines your leverage.

Or you can choose he leverage you want and you stop loss and this will dertermine your percent risk

 

[Adamus]

You can work out the optimum leverage if you have a trade history already.

You'll need a trade history where you have used the same lot size /leverage on all the trades, and you'll need a good idea of the maximum potential loss that you're susceptible to (i.e. a bit like the kind that would blow through your stop), and you need your account size. Then you can work it out, either with a formula or just putting it into a spreadsheet and playing with various leverage levels. It's fixed fractional money management and some people, e.g. Ralph Vince, make careers out of writing about it.