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Forex Leverage Explained For Beginners & Everyone Else! - YouTube
Channel: Etienne Crete - Desire To TRADE
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a lot of people get really interested in
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forex trading when they hear the word
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leverage does that mean I'll be able to
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make more money it kind of but there's a
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but what's we guys will come back to
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this video today I thought I would look
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at leverage it's a question I get very
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very very often and I don't think I've
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made a video on that topic before I
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think I've mentioned it a couple of
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times but I won't take the sensible
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approach to leverage and something you
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won't see on youtube I think in the past
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having thanked people that's never
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really didn't matter but I was a little
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bit wrong with that and I want to share
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exactly how you should figure out
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whatever to use based on the math behind
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it
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now the goal of the fridge is not to
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make more money it's not dangerous it's
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not gonna make you lose more money it's
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just gonna be there as a tool that you
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can use to kind of manage your risk
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effectively and still be able to trade
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and get some reward for this video I'll
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take a very simple example with and I
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kind of let's say $1,000 I just pick
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this amount because it's easy to
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calculate and we'll just go with that so
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if your account was using a 1 to 1
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leverage which most people won't ever
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use it for X and I'm not using that at
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all but let's just say that would be the
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case with $1,000 you'll be able to buy
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approximately it doesn't unit of a
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currency let's say that when you need
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cost dollar which communicates on some
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pairs now a thousand units isn't that
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much right something that most people
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would not like to trade necessarily but
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23 hours a day fund first it's gonna be
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your risk
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the goal of leverage is only to allow
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you to use your full risk that you're
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allowed to take in a trade and it should
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be the basic objectives so let's say
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that your risk per trade is 1% and on
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$1,000 that would be $10 you basically
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only be allowed to have a stop loss of
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100 pip here to buy a thousand units to
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reach you $10
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stop-loss and that's not a lot and you
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already are Pauline with all your money
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which mean you cannot trade more and
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that's the situation you don't want to
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be in because there's going to be
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opportunities in the market that might
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or might not happen at the same time and
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you need to be able to take multiple
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threads when they happen not to limit
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yourself to only one so that's where
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leverage comes into play and where you
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can use it too many feet you not to hurt
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you but uses kind of the smart way and
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that's what I want to teach you guys do
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now if you go on oh and uh which is a
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broker I use they have a kind of nice
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calculator that shows you what you have
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to put in as a margin so what do you
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need in your account for whatever
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leverage you want to use so let's say
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you want to use 20 to 1 as leverage in
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your account and you buy your USD let's
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say you buy a thousand unit like an
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example before you would only need
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basically $40 in your account which is
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allowing you to take more trades all
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right and you're risking a bigger your
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risk is design because you control it
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with your stop-loss you take profits
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this time everything is the same except
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that you will be able to take more
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trades so with that in mind it's kind of
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logical to take more leverage but you
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must be careful not to get to a point
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where you are too high where if you make
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a mistake you could be screwed that's
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basically the basic premise if you
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control your risk the same way no matter
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what level you use just understand that
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you need to be able to take the trades
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you take an average I try to go back in
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time figure out how many trades have I
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taken at the same time on different
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currency pairs and if the answer is five
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and sure that you're leveraged oh I used
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to take five trades
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if the answer is ten ensure that the
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leverage you have allows you to take ten
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trades and my levers in my account and
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just looked it up for fun is set to d-21
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which is what actually as an example
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it's fine I won't ever use three two one
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because I'll be able to take way too
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many trade to reach the full amount of
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my account what is there just so that
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it's easier and I don't have to worry
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about it
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so all this makes sense if you guys get
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some value with that question and Aisha
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is clear but do you have any questions
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coming below like me your thoughts as
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always
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like the video if you liked it today and
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subscribe see more videos like this
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there's one every single day on average
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but I'll see you guys tomorrow
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