Forex Leverage For Beginners - High Leverage Investments
Forex is known to be a high risk high reward investment platform. Many investors are lured into taking the plunge due to the nature of high leverage that is available in the forex markets, which in some cases can be up to 1000:1.
This means that for a $1,000 deposit you made in the account, it has a maximum buying power of up to 1000 x $1,000, which is enormous. This huge buying power may work for you or against you, like they say, leverage is a double edged sword.
As a retail trader, how can you use the leverage given in your advantage and what is the best leverage to use in forex?
Trading using an EA.
Should You Get A Managed Forex Account?
There are many forms of managed accounts. The most common one is your funds being managed by a professional trader. While this is a good option, it’s not easy to find good traders who are money managers at the same time. And if there are, they usually have a high minimum entry level of $100,000 deposit and up.
The second option is you managing your own account, be it with manual or automatic trading. Using an expert advisor with a proven track record is a good strategy in growing your account. It’s almost the same as being managed forex trading account, managed by an expert forex account manager, except it’s your very own algorithm.
Expert advisors are trading algorithms that can read and trade the markets automatically. It is created to aid the human trader in making trade executions. In some cases, human intervention is still necessary at particular times. No matter how good the algorithm, it is not able to replace the human 100%, take for example tasks like flying a plane or driving a car.
Potential Forex Trading Returns
We have tested the EA in normal market environments, with both conservative and aggressive settings. With leverage, we are able to maximize our lot size to max out our potential returns, though this means that we’re increasing our risks as well.
For very aggressive settings, we have used a $1000 balance and trading with 0.04 lot sizes, across four currency pairs. As you can see, the returns are astronomical, and you can make your initial investment and money back in a matter of time. Our advice is for you to make periodical withdrawals, in case the inevitable happens, such as rapid swings in the market. With high leverage, you have less holding power and your account may not be able to withstand such movements.
Alpha Scalp Advisor is able to execute many trades within a day, utilizing profit with the day’s up and down movement, just like a forex managed account, as you can see above.
For conservative settings, it’s recommended that you trade with 0.01 lot with a balance of $1,000, for a maximum of two currency pairs. This is considered to be a safe setting that can provide a more slow and steady returns over a period of time.