Leverage and Margin in Forex Trading (Podcast Episode 8)
Вставка
- Опубліковано 30 вер 2024
- Leverage in Forex trading simply comes down to how much Forex trading margin you have to use for every trade you make. Once I show you the difference, it's a lot easier. Plus, as always, I give you a real blueprint to follow. Two actually.
This is very easy to get wrong. The good news is, once you have a good number in place, you can set it and forget it. Having the right leverage is also a great way to figure out if you're over-trading or putting too much money on a single trade.
Links galore for this episode.
Blog for Episode 8 -
nononsenseforex...
ESMA Ruling -
www.esma.europ...
Dodd-Frank Act (2010, not 2012, my bad)
en.wikipedia.o...
Screenshot of my Metals Account -
imgur.com/ITBUdiO
ATR Video -
• The ATR Indicator Is T...
Money Management Video -
• The Money Management F...
Dirty Dozen Video -
• 12 Technical Analysis ...
Recommended Crypto Trading Platform (Bonus and Contest Eligibility) -
nononsensefore...
Blueberry Markets Blog (Top FX Broker) -
nononsensefore...
Markets.com Blog (Other top FX Broker)-
nononsensefore...
US Residents Go Here (Top US FX Broker)-
nononsensefore...
the most important forex content youtube videos out there! thanks for your hard work to help us out !
I don't often comment youtube videos but heck, I'm really surprised not only by how transparent you are but also by how clear your messages are. Great combo for a forex teacher! Thanks, full support from France!
the amount of loss is determined by the number of lots you placed and the distance of the SL to current price. i.e 0.01 or 0.1.
leverage only helps by lending money to your trading account at a higher "interest". as what VP mentioned, it allows people to put in small portion of their trading funds into the broker but still want to trade 2% (for example) of their total trading fund. 1-2% is the golden rule per trade to minimize the risk of ruin.
I would like to mention one thing to my fellow viewers, I've been trading for 2 years now, but VP is teaching a loooot of things, please ingest it slowly and try to incorporate one thing at a time in your trading arsenal.
You hit the nail on the head with the blog user experience sentiment. I cannot stand it. I think the worst is when I google something and I click a link thinking I might get an answer, I'm actually led to a slideshow (with ads!) that I have to click through just to get to the answer that could've been given in a few quick sentences. Terrible. Good job on your blog. Clean, concise, easy to navigate.
Us Aussies can trade gold and the metals. We are lucky.
Wow, I would have liked to know your channel when I started. btw you're content is gold bro !! Notification bell is on for the first time too
Just went and changed mine to 1:25 (it was set to 1:500 by default!).
you say that you better in writing. are you some day gonna publish a book because i think it will be a great idea!
It would probably just be a culmination of what you already see in these videos, so probably not. Appreciated though.
@@NoNonsenseForex this didnt age well or did it ;) ....
@@juregrobelnik8047 did he write a book lol
@@ZTheMoki yes!
Haha your wish has been fulfilled !
Hi VP, when I get my algorithm done and tested, I want to get good at it and work for a company like you do. OPM is what I like.
Thanks.
Is it done yet and if yes can u pls tell me the steps u took to create one
@@amoghthatte754 I'll tell you the steps.Step 1 watch all his videos. Step 2 Go Get It.
E Rémy 🤣😭🤣😭🤣 I’m sorry but You hit the Hammer on the NAIL!! #ShortAnswerLongAnswer now has a #BestAnswer option 😂😂😂😂😂 absolutely worth it!!
Negus Esh I had too 😂 its what VP would say
Damn I really need that, getting back to demo at the moment and I’m the type that definitely over leverages, this will make me more disciplined, thank you so much!
How come when one opens a trade the Margin is one thing, then later the margin is increased (doubled)? I find this strange.
The calculation of available margin includes floating profit/loss. So if your trade is in profit, your margin level increases and you are able to open more trades. If you are in a loss, your margin level goes down. Depending on the position sizes you are using relative to your account size, the doubling of margin you reported may very well happen.
Could you please clarify the % risk were you mentioned $50k account @ 2% risk with 20:1 leverage then if you only want $25k exposed to the broker with 40:1 leverage but you still have a 2% risk per trade and the size of your trade does not change ? .... Is that of the $50k or the $25k ?
I use a leverage of 100:1 in Australia. But I can go up to 400:1 if I want.
I don't often comment youtube videos but heck, I'm really surprised not only by how transparent you are but also by how clear your messages are. Great combo for a forex teacher! Thanks, full support from France!
Hi VP, if the leverage is at 20x and your risk recommendation is 2% per trade of the total account value, then is this 2% of my actual money or of the leveraged value. I.e. 2% of my actual 100k or 2% of $2m (20x leverage)?
VP. Your video making skills are just great. Professional and clean content. No blah blah. What is knowledge if it is not shared. Thank you for your knowledge.
VP I remember you saying you're not a computer person, but you can download Adblock extension for Chrome and it turns off all Ads on any website.
I disagree with your analysis of your video creating and podcast abilities, your video layouts stood out most on my youtube search when I first started researching ForEx a year ago, your podcast is direct and to the point, I appreciate your work, I have always been interested in ForEx but was hesitant, you made my choice to get involved easy. All questions were answered better than I ever expected, so grateful, Thank you from the bottom of my heart. Real recognize REAL!
This Is super amazing!!!!! VP you are amazing, Thanks a million
How do I check leverage on TradingView?
I watched and followed most of your content however I had to come back to this video because it seems to contradict what you say later in your content. I think it was in the phycology videos you said there are no shortcuts and tools like leverage are for instant gratification monkeys. This video however states to set your leverage at 20x and leave it. I tried both with a working algorithm and 20x leverage hurts. Many times in forward testing the 1.5 ATR stop loss get hit on the next or following candle knocking you out of the trade before it bounces back to what would have been a profitable trade. Such high leverage can reach your stop loss far too quickly with a 2% risk.
Leverage is a strange topic. Technically, leverage itself isnt the issue. Trading big is trading big wether its your money or not. The loss is always yours to bear, always. I think for new traders the biggest reason leverage is so dangerous is because they dont truly understand it until they've lost alot of money, which is mostly because of poor risk management isnt it?
With that said. I can see how leverage in the extreme is definitely just a bad idea as an account wipeout can occur on one bad trade. But personally i feel 1:50 isnt too bad for novice retail traders, granted their money management and risk is good.
As a professional trader you can still trade with a leverage of 200:1 with most forex brokers in the EU but you have to renounce in writing to any account protection that the regulator of the country concerned offers. For example, trading in the UK, you have to renounce the account protection of GBP 50,000 offered by the Financial Services Compensation Scheme (FSCS) in the event that the firm goes bankrupt.
I am from Europe (The Netherlands) and I use a Australian broker. Using a leverage of 1:400. Higher gains but higher risk.
Same! Which broker? Axitrade
I thought traders leverage got cut to 1:30 unless you are a professional trader right?
@@lewisjohn2597 not in Australia only Europe
Come to Australia VP 😀
Hey VP THANKS for the informations really good work
what i do if my brokerr(blueberry market) doesn't provid a 1:20 leverage ? it's minimum 1:100
No way it's minimum 100:1
Do you risk 2 percent of you deposit or 2 percent of the total value of account including leverage ?
I'm digging your stuff, i believe unterstandind the correlation between leverage and stop loss is crucial. I hope i will work this thing out and find a thing or two in your channel.
Hey VP your concept and podcast are great! Thanks for that
Why not trade gold futures? /GC gives you leverage.
leverage to 20:1 - noted.
Been listening to this all day now, between phone calls and meetings :)
Why 20:1 leverage is optimal or good remains unanswered for me.
That's just the max. You would never use 20:1 leverage on anyone trade.
@@bunkerman99 That's not what he said.
Why limit the leverage? Your risk depends on the lot size and the stoploss, not the leverage. The higher the leverage, the lower the margin you use.
You're correct, but to prevent overleveraging when you're starting out, I just tell people to put it on 20:1 and walk away.
I'm all nerd out on this.
thanks
Talking about UK leverage....lol...you would feel right at home in Japan.... you must have been in bliss over Dodd-Frank.....lol... 1st leverage doesn't matter.... 25 could kill yes 1:1 or 1000, 3000 lol... It all depends on "allot" factors....as far as safety or risk.... managing your capital, positions, being well capitalized, and how and what your doing, under what conditions and rules....etc...etc Risk wise for example and most people; Equity markets, are used by the masses, actually in my mind are crazy... If people listen to you they should just forgo the Forex and just do derivatives domestically in the Commodities Market...lol
The only Edgy Thing I want to say.... I think there might be a possibility that you all helpful with/to active liquidity so.... thanks ....maybe $$$. :-p
This dude does not sugar-coat what he has to say, but if your ego can absorb what he has to say, he'll turn you into the supreme trader. He's the only one, and I have run into many, trading guru that ever had the gutts to emphasize, and this is a bigggie, to say that trading skills is the least important skill set, in trading. Well, if you wish to do it right!
There are 3 pillars: Money Management, Trading Psychology, and Technical skills. And the most important ones, are the first 2. And guess what? He is freaking right at 100%. And he's 100% only cause we can't make him right 600%. This is the real deal. Gangsta :)
ESMA was cruel, ruined my plan.
I always knew I shouldn't think or worry about how much my leverage should be but couldn't really figure it out until this episode. thanks VP 👍
do u have portfolio?
Hell VP im new to your channel i had subscribe and watch almost all your podcast and videos,I just want to say thank you for all the hard work you put in. I appreciate you :)
I still don't know how leverage works. I don't get it, can someone show me how leverage works in trading ? I mean, in a live trading, with a chart ? And how to compute our pip value with this ?
I remember back when I was trading at high leverage (super irresponsible). My trade dipped (did not touch the stop loss at all) and the brokerage close the trade (suffered a huge loss) even though the trade later on hit my profit target
Your leverage doesn't really matter as long as you're not using it to trade say $10 a pip on a 2k account. What's more important as you would say is understanding money management as a whole and what you're risking on your trade.
Just wanted to say spot gold in canada you require 4% I think it is the same in the US not sure where the 1 to 1 comes from. I guess I could be wrong.
Listening to VP is always refreshing. Thanks VP
I'm not from Europe so I have the bad luck of having the smallest leverage set at 50 the smallest.
There is no more risk because of E S M A and your account cannot become a minus where you owe the broker, you just need to have more money in your account. It will affect sales men selling useless courses because they are aimed at financially challenged dreamers.
regards
Hayden
🙏🙏🙏🙏🙏🙏🙏🙏🙏🙏🙏
What is recommended for you VP fixed spread or variable spread
So for the record I did walk back, and apologize.
How do I do a review on ITunes? I don't see an apparent way to do this and I'd like to do a review...
Always thankful for your podcast and videos, VP!
Speaking of ridiculous laws on leverage - in India, they are cutting down the leverage to 1:2.5 (or 5 for low-volatile stocks) after dec 2020. Now i am trying to open an account with a foreign broker...Thanks for your non-us brokers review video, VP.
For stocks, that's not far from what we have in the US.
Hi vp - back on this - Amazinnnnngggggg !
VP you da man
Can I use all this in to stocks or just forex?
Hi VP I am new to trading do the big banks move quick enough to stop a scalper?
Usually yes
You chat a lot of irrelevant stuff for the first 5 minutes of your videos
Does that bother you? If so just skip ahead.
Thank you!!!!!
What does prop trader mean?
Prop traders are professional traders working in hedge funds, banks and other financial investing institutions.
ua-cam.com/video/gENXjmVuTXM/v-deo.html
No one:
iTunes:
VR: give me a review and like on iTunes
how do you cope with ADD ? lets hear some tips please
Triple down on the advantages it gives you.
Good one
and that's just for forex, for stocks here in europe we can only leverage 5:1, which is insane...
because of a bunch of irresponsible "opportunists", now we're all grounded.
I keep saying, criminals are the main reason things are so restrictive, less so regulators.
how do you change the leverage on your account?
From your broker website, you log in to your account and find the change leverage setting.
Shouldn’t you be working out the maximum you pips you would lose based on the stop loss that’s being set in place and then based on the lot that you are trading, then convert that into the maximum $ you could lose for that trade, then work out the percentage of this $ amount against your total equity, then determine your leverage?
All of that is how you calculate your risk, you described that part really well. But it has little to do with what your leverage should be.
No Nonsense Forex thanks for the clarification, much appreciated! I’m a newbie in the FX world and just make baby steps! I’ve just literally spent all night reading your 1-13 podcasts, really helpful information! One silly question, what are the actual 28 pairs you would trade? I get the 8 major ones, but not clear on the actual remaining 20 combinations
No Nonsense Forex VP, what I’m trying to overcome is find the right balance between leverage and risk per trade. For example, if your equity is $1k and leverage is 100x and your maximum loss on a trade is 50 pips before stop loss hits, then if you place a trade for $20k (20% of $100k) you would potentially lose $100, 10% of equity.
But without leverage if you place a trade for $200 (20% of $1k) using the same stop loss, then you would potentially lose only $1 which is only 0.1% of your equity. So the question is what % of equity that a trader can afford to lose will drive the leverage ratio. Does this make sense or I’m completely on the wrong path?
so if i have 200 in a account how much should i leverage please nobody can anwser this for me
something like 0.01 to not lose it all too fast
Dont go above 1:200
Thank you
I opened an account based in australia.. get 200:1.. I live in Spain
Could be asking for trouble if you use 200:1😉
True. But i have learned to use mini lots.. burned and troubles I ALREADY got...
⚖👍🏾
Thank you VP!
thanks
👍
Much thanks VP
here in my country, we cant go lower than 1:50, so 1:20 is out of question
You're NOT ALLOWED to go lower than 50:1?? Which country is this?
@@NoNonsenseForex Don't make fun of him, obviously he doesn't understand how it works :P
so does that mean that if i have 1000$ and then leverage it 1:5, for example, the risk management suppose to be on the 1000$? or the capital after the leverage? thank you.
If you have a leverage of 1:5 means that for every 1 dollar that you invest the broker lends you 4 dollar . So if you want to enter a position with 0.01 lots that is the minimum you need to enter with 200 euros . 200 euros from you 800 euros from the broker for the total of 1000
The best way to understand leverage is like a down payment of a house. When entering a forex market you need to define your position that is measure by lots size. Minimum lote size is 1000 euros but you can upgrade as much as you want for 0.1(10K ) or 1 lot size (100K) or even further . But you don't pay the lot size fully just one percentage that is define by your leverage size( margin ) . For example purpose if you enter with a 0.01 lots (1K) and have a leverage 1:50 you only need 20 euros to enter the other 980 are lend by the Broker
@@ricardopereira1126 Ok thank you. but let say currently i have 500 dollars. i leverage it to 1000 dollars. so when doing the risk management part and calculating risk (2% of your money)- will it be 2% of my initial 500 dollars? or 2% of my leverage capital which is the 1000 dollars
@@guymosko96 2% of your account value and not the leverage money . You only risk the money you have.
@@ricardopereira1126 so whats the point of having leverage basically?
Amazing Podcast, as usual. Just one question came to mind. Let's say you make it, you get good and you can make ~15% a year or whatever is realistic. In Eposide 5 you said, you barely can make a living with $100k USD in your trading account. But basically with 1:20 leverage, you would trade $2mil with your $100k and 15% ROI on 2mil would totally make a living. I am probably applying the wrong logic... correct me. :)
The 2% risk is based on actual account size before leverage. You're not going to risk 2% of 2 million or $40,000 per trade for very long.
@@rcrhinehart66 I am not sure if I can follow you. With 2% risk you talk about money management?
@@Chris79DE Yes, money management. The stop loss of any order would be set to a maximum of 2% of your account balance regardless of leverage. VP has a full video on that here.
@@rcrhinehart66 Not there yet, I follow the exact order he suggested to digest his content in the "beginners" video. But that is basically logic, if I am willing to risk 2% per trade and my account is $10.000, I can risk to lose $200 per trade. So basically I can reverse engineer the amount of lots I can trade when I know how much is a pip in USD and how many pips away I set my stop loss. - Thanks for the clarification.
I don't get this part. He sad that he make 20% ROI a year, and that is in Warren Buffett levels, and S&P is average 12% so he beat that. But if he is using 1:20 (which is pretty high) his 20% is basically 1% ROI per year with no leverage. Can someone please explain me that or I got it all wrong? Thanks.
Thank you
The click bate for me on this was the title, I knew it would be critical in a general way... But in context with your talking about...I guess I get it. But 25-50 to one leverage is lame, below reasonable industry standard as far as choice, now if you choose...50 that's fine...but then it's a choice. The government need not tell people how to trade! It was more bias towards polictal /big brother, and the competition/loss with Future's/Commodities etc who were loosing out... to the spot markets. The then head of the executive branch at that time was from Chicago....lol. peace ✌️
Tips for someone trading with not a lot of capital?
According to his videos. Better off buying chicken n chips and enjoying your day
First thank you for everything! I first listen to every podcast you have because you are the only one who doesnt seem to try to sell us the american dream, get money fast without effort. Now i started to tread with a demo account and i want to do exaclty as you say and teach. The leverage i can choose from my broker starts at 1: 10 and the second is 1: 50. I'm only using 5000 eur in my demo account and when i start with real money i'm able to invest 5000 eur . You talk about 25000 dollars to set a leverage at 1:40 So is it oke To set mine at 1:50 when i use 5000 eur. If you dont replay its oke i'll keep searching your blog for the right answer and still think you're way is the best so thank you again
You could, but I would start over with a 50,000 EUR account and just have the 20:1 leverage if I had the choice.
@@NoNonsenseForex Tanks for your answer, i'm going to find a broker that does 20:1 and start a demo account with 50000. I'll keep my demo 5000 to 1:50 and the compare then with each other. And off course start saving for 50K. but first my money management and trading psy. I'm a big fan and appreciate you effort and honesty to us. Respect
Bro a guy i know earns 200 to 300% in a day and he resently hit 100 million in profits in two months🙂 goddaaamnn
thank you VP!