Category: 2. Number 1 Cause of Death of Forex Traders

Most beginners underestimate the potentially devastating damage leverage can wreak on their accounts. Understanding leverage enough to know when to use it and when NOT to use it is critical to your success! Leverage is a very powerful tool but both old and new traders use it to destroy their trading capital simply because they… Continue reading Never Underestimate Leverage

Besides amplifying your losses, leverage also has another way of killing you. It’s a much slower kind of death though, kinda like dying by a thousand cuts. Most forex traders don’t see it coming and by the time they notice it, they’re DEAD. This killer we’re talking about is the associated transaction costs of using high… Continue reading How Leverage Affects Transaction Costs

As a trader, it is crucial that you understand both the benefits AND the pitfalls of trading with leverage. Using a ratio of 100:1 as an example means that it is possible to enter into a trade for up to $100 for every $1 in your account. With as little as $1,000 of margin available in your account, you can trade up to… Continue reading Low Leverage Allows New Forex Traders To Survive

Hopefully, you now have a better understanding of what “margin” is. If you don’t know what margin is, or think it’s an alternative form of butter,  please read our previous lessons. Now we want to take a harder look at “leverage” and show you how it regularly wipes out unsuspecting or overzealous traders. Before we… Continue reading See How Leverage Can Quickly Wipe Out Your Account

Margin can be thought of as a good faith deposit or collateral that’s needed to open a position and keep it open. Margin trading gives you the ability to enter into positions LARGER than your account balance. Although buying and selling on margin does not provide leverage in and of itself, it can be used as a form of… Continue reading Be Careful Trading On Margin

Assume you are a successful retired British spy who now spends his time trading currencies. You open a mini account and deposit $10,000. When you first log in, you will see the $10,000 in the “Equity” column of your “Account Information” window. Usable Margin You will also see that the “Used Margin” is $0.00 and… Continue reading Margin Call Explained

Let’s discuss leverage and margin and the difference between the two. What is leverage? We know we’ve tackled this before, but this topic is so important, we felt the need to discuss it again. The textbook definition of “leverage” is having the ability to control a large amount of money using none or very little of your… Continue reading Leverage and Margin Explained

Most professional forex traders and money managers trade one standard lot for every $50,000 in their account. If they traded a mini account, this means they trade one mini lot for every $5,000 in their account. Let that sink into your head for a couple seconds. If pros trade like this, why do less experienced forex traders… Continue reading Ignoring Leverage: Why Most New Forex Traders Fail