Posted on / Business and Finance

Traders Must Be Careful With High Leverage From Untrustworthy Brokers

Often we find a broker that offers very high leverage up to 1: 1000 or even 1: 3000 or more. However, there are also brokers who offer low leverage such as 1: 200 to 1:50 or below, and low leverage is usually provided at regulated brokers because the regulator also does not want to harm traders so that the correct regulatory agency will also guarantee if anything happens to the brokerage company. Furthermore, if you worry about the choice of your high leverage broker, you can go to http://www.cnie.org/highleverage/high-leverage-mt4-brokers.html if you want to find trustworthy brokers that provide high leverage.

So, which is better and safer, High or Low leverage?

With leverage, the formula for % of the use of margin capital = leverage x 100

Example: Leverage 1: 200, it only takes (1/200) x 100 = 0.5%

So to trade in lot volume 1 (worth 1 x $ 100,000), you only need a margin of 0.5% capital from the $ 100 thousand, which is = $ 500.

With just $ 500 you can trade the same amount of $ 100,000 as you would buy at a conventional money changer.

That is the attraction of Forex Trading because of the leverage factor so that people trade with small capital but it can produce greater value.

From the above factors, it seems that the higher the leverage, the more profitable it is. Is that even true?

The answer is NO!

Why?

Basically, human nature is greedy, and many who do forex trading are actually being chased by one goal, and that is WANTING TO GET RICH QUICKLY or GET A LOT OF MONEY. (what is your reason for choosing this forex trading?)

Even if we know that if forex can make everyone who is involved in it become rich quickly, then, of course, there will be no more poor people in this world, of course, the thoughts of ordinary people who have not studied deeply about the world of trading, and usually they only consumed by Actors paid by naughty brokers, advertisements or by Forex seminars/trainings that promise something tantalizing, even though it is just a marketing trick to attract consumers.

Then, we can assume that leverage is a double edge sword. We must understand the risk before we wield it.

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