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Started by Indonesia, Apr 09, 2020, 09:23 am

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The advantages of trading with high leverage brokers can make the mouths of even the most experienced traders water. The sheer unpredictability with which positions emerge and the appeal of massive gains from relatively minimal capital investment make it an exciting world to do business. But just as the gains are sweet, trouble is real when trading with high leverage Forex brokers. In fact, there have been rising calls amongst international regulators looking to clamp down on the less savvy consumer.
This is to stop traders from investing their life savings without a comprehensive understanding of the pros and cons of this intricate and potentially high-risk investment strategy. That said, here is a comprehensive list of the pros and cons of trading with high leverage Forex brokers.
10 Best Forex Brokers with Highest Leverage.
Broker Info Bonus Open Account Min Deposit: $100 Spread: From 0,2 Pips Leverage: 1:200 Regulation: FCA UK (#186171), CySEC (#259/14), CIMA (1442313) and DFSA (F000048) 10% Welcome Bonus up to $5,000 Visit Broker Min Deposit: $1 Spread: From 0 Pips Leverage: 3000:1 Regulation: CySEC, IFSC $100 No-Deposit Bonus, 100% Deposit Bonus, Lucky T-shirt, iPhone 6s Plus Visit Broker Min Deposit: $5 Spread: From 0.2 Pips Leverage: 500:1 Regulation: FSA (Saint Vincent and the Grenadines), FCA UK (#679306) 50% Deposit Bonus, Real contest 1st prize Luxury car BMW X5 M, Copy trading, Trade&Win. Visit Broker Min Deposit: $5 Spread: From 0 Pips Leverage: 500:1 Regulation: ASIC, CySEC, FCA (UK), IFSC Belize "50% +20% deposit bonus up to $5,000, Loyalty Program Bonus Visit Broker Min Deposit: $100 Spread: Starting 0 Pip Leverage: 500:1 Regulation: FCA UK, FSA (Seychelles), CySEC Visit Broker Min Deposit: $1 Spread: From 0 Pips Leverage: 2000:1 Regulation: FCA UK, CySEC, FSP, BaFin, CRFIN 35% of the account Deposit Visit Broker Min Deposit: $50 Spread: Starting 0 Pips Leverage: up to 400:1 Regulation: FCA UK, NFA, CFTC, ASIC, IIROC, FSA, CIMA Visit Broker Min Deposit: $1 Spread: Fixed Spread From 3 Pips Leverage: Up to 1:1000 Regulation: CBR, CySEC and FFMS 30% Forex Deposit bonus Visit Broker Min Deposit: $200 Spread: Starting 0 Pips Leverage: 500:1 Regulation: ASIC Australia, FCA UK Visit Broker Min Deposit: $10 Spread: Leverage: Regulation: CySEC - Visit Broker.


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Before we delve into the pros and cons, it is worth explaining what leverage is.
What is leverage ?
Leverage is a service offered by Forex brokers. It allows FX traders to place orders that are significantly higher than their actual deposit. This, in turn, helps them achieve higher profits in the market. In the same way, when using leverage, the traders risk losing their deposit faster.
Pros of Trading with High Leverage Forex Brokers.
Increased profits.
The first and most obvious benefit of trading with high leverage Forex brokers is that it earns you more money for less effort. Regardless of the nature of the instrument being traded or whether you are staking a small or large amount, the key role of high leverage brokers is to increase your profit by multiplying the stakes. Although the same effect could be achieved by investing more capital in each position, leverage works to ensure it is a step ahead in artificially boosting your available capital, usually by hundreds or even a thousand times.
Increases capital efficiency.
In conjunction with the point above, high leverage Forex brokers give you the ability to earn high profits per transaction, naturally increasing the efficiency with which you are using your capital. For instance, if it takes you a week to generate $100 with an unleveraged position, leveraging it up means it will take a shorter period to deliver the same results.
In essence, this means that your capital and revenues will be freed up sooner and can be reinvested more times to deliver the most significant and fastest yields possible.
Trading with low capital.
A few years back, only the wealthy could make a profit through Forex trading. This is until the introduction of leverage which allows anyone to do it. Leverage allows traders to start trading without having to provide large amounts of funds.
Another important benefit of higher leverage Forex trading is its ability to mitigate against low volatility. A volatile trade is one that delivers the highest profits. Unfortunately, due to the cautious nature of Forex market traders, volatility tends to be at the lowest end of the scale. High leverage mitigates this by offering larger profits from smaller transaction sizes. High leverages allow traders to capitalize on even the smallest degrees of movement in market pricing.


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Cons.
High leverage FX brokers are the true double-edged sword. When they work for you, they really work for you. But when they turn against your position, trading with them can do some serious damage to your finances within the blink of an eye. Therefore, it is important that as a trader you also understand the disadvantages of trading Forex with high leverage brokers.
The main disadvantage of using high leverage brokers in trading is that it carries a high amount of risk by paving the way for heavy losses. The goal of leveraging is simply upping your ante so that you are essentially playing with more money. Hence, when the games are up and done, you keep huge profits but also bear the losses.
High leverage can end up costing you a lot more than you bargained for, especially when your positions inevitably head south time and again. It is important to know that the higher the leverage you are trading with, the larger your chances of profit and loss are.
When trading Forex, it is crucial to understand that leveraging automatically builds a liability that must be met by your account by the end of the day. Regardless of whether a transaction is up or down, or how many additional costs you have covered at the end of the day, the basic cost must be met and will automatically be applied to your account.
This means that by simply entering into a position, you are by default handicapped since you will need to meet the automatic liability of the leverage portion at the close of the trade. Even if the transaction eventually trends towards zero, the leverage amount will still be owed and must be paid before you can move forward.
Any leveraged trade earns a higher cost. The funding applied to your position must be paid for in terms of interest. Whenever you leverage your transaction, you are essentially borrowing money from your broker and will be required to pay with interest. This interest is calculated and applied daily depending on the rates set by your broker.
Note that the higher the leverage amounts in the trade, the more interest you will incur and the commission the broker will charge to open the contract.
There is also the ever-present risk of falling below the margin requirements set by your broker. The margin call is the set percentage of any transaction size you are required to fulfill in terms of your own capital. If at any time you fall below that threshold, you can expect your brokers to prompt the margin call, which automatically liquidates your portfolio as far as meeting your obligations is concerned.
This could mean that any standing positions that could have run on to deliver massive profits are closed out early in addition to settling losing positions that may never recover.
The bottom line When managed well, trading with high leverage brokers can be a successful and profitable move. Just make sure to never use high leverage if you are taking a hands-off approach to your trades.


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Forex: How to Determine Appropriate Effective Leverage.
A common question traders ask in our courses is how much leverage should I use? In our trading courses, w e frequently talk about using less than 10 times effective leverage .
To get started, let's look at what leverage is and why it is important to generally use less leverage rather than more leverage. Later on, we will explain the simple calculations needed to determine the effective leverage on your trading account.
What is leverage?
Leverage refers to using a small amount of one thing to control a larger amount of something else. As individuals, we use leverage to some degree in a portion of our daily lives.
For example, when you buy a house on credit, you are actually leveraging your personal balance sheet. Let's say you wish to buy a $200,000 house but you don't have that much cash on hand. So you put a 20% down payment of $40,000 on the house and make regular payments to the bank. In this case, you are using a small amount of cash ($40,000) to control a larger asset ($200,000 house).
In the stock market, many margin accounts allow you to lever up your purchases by a factor of 2. So if you have a $50,000 deposit into a margin account, you are allowed to control $100,000 of assets.
How is Effective leverage calculated?
To determine the amount of effective leverage used, simply divide the larger asset by the smaller instrument. So in our housing example, we divide the value of the house by the equity in the house which means the house was levered 5 times.
($200,000 / $40,000 = 5 times)
In the stock market example, our leverage is 2 times. ($100,000 / $50,000 = 2 times)
There is simple formula to determine your account's effective leverage. This formula is printed below:
Total Position Size / Account Equity = Effective Leverage.
EXAMPLE:
Now, let's take a hypothetical trader and calculate their effective leverage in their Forex account. Let's assume that a trader with $10,000 equity has 3 positions open noted below:
The traders total position size is 70,000. (20k + 40k + 10k)
Using the formula noted above, the trader's effective leverage is 7 times.
(70,000 position size / $10,000 Account Equity = 7 times)
How do I know how much leverage to use?
There is a relationship between leverage and its impact on your Forex trading account. The greater the amount of effective leverage used, the greater the swings (up and down) in your account equity. The smaller the amount of leverage used, the smaller the swings (up or down) in your account equity. In our trading courses, we frequently talk about using less than 10 times effective leverage.
Just because you have access to a higher amount of leverage in your account does not necessarily mean you want to use all or any portion of it. Think of it like an automobile or motorcycle. Just because the machine could run at speeds of 200 miles per hour, that does not mean YOU necessarily need to drive it that fast. You see, the faster you drive it, the more likely you are to get into an accident. Therefore, you are in greater risk of bodily injury driving at higher speeds and leverage is similar to that analogy. More leverage puts your trading account at risk.
Why do we encourage lower leverage?
When you use excessive leverage, a few losing trades can quickly offset many winning trades. To clearly see how this can happen, consider the following example.
Scenario : Trader A buys 50 lots of AUD/USD while Trader B buys 5 lots of AUD/USD.
Questions: What happens to Trader A and Trader B account equity when the AUD/USD price falls 100 pips against them?
Answer: Trader A loses 50.0% and Trader B loses 5.0% of their account equity.


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Top 10 Best High Leverage Forex Brokers 2019.
by filippo | Jan 29, 2019.
Are you looking for the best high leverage Forex brokers because in these days you are only finding major brokers with very low leverage?
Are you an EU resident and you would you like to find serious brokers with high leverage?
We have solutions.
Some of the major brokers still offer the possibility of trading with high leverage.
But let's see everything together.
Typically, high leverage Forex brokers have the advantage of offering tempting conditions for the rookie trader. High leverage usually comes with no minimum deposit requirement or just a symbolic one, for instance.
Therefore, traders are attracted by the simplicity and easiness to access the interbank market , while ignoring the rule of thumb regarding the risk.
Higher leverage, by definition, means higher risk .
Are high leverage Forex brokers riskier than other ones? The right answer is no.
All of them offer different types of trading accounts that suit every kind of trader. Swing traders and investors alike have access to quality execution, ECN accounts, and excellent trading conditions.
Even among best Forex brokers with high leverage, some trading accounts and conditions are incredible. Moreover, the high leverage refers to only specific types of trading accounts and doesn't apply to all regions of the world.
As usual, we've put together the top ten brokers fitting this category, with all the things to consider like regulation, brokerage type, minimum deposit conditions or the markets offered for trading.
Higher leverage in a trading account is perceived as riskier due to the possibility of consuming all the funds if things go wrong. As beginner traders usually ignore money management techniques, are destined to face harsh market conditions sooner rather than later.
Therefore, pay close attention and try to consider all risks well and manage them to the best, especially if you decide to use high leverage.
(This post is part of the top Forex brokers series)