You probably don’t hear too much about the dangers of using too much leverage on Forex trading. Just because your reliable broker is offering you high leverage, you will take that advantage. The best way of using high leverage is when your trade is making a profit, you add positions in the same direction. In this piece of content, I will discuss every detail of leverage, from what is a good leverage ratio for Forex to best leverage for $200 account.
The best leverage for $200 account
The best leverage for a $200 account is 100:1 leverage. Suppose you opened an account with 200 dollars, then you will have trading capital worth $20,000. What does it mean? It means your broker is lending you 100 dollars for every 1 dollar you deposited in your broker. Thus by investing 200 dollars with 100:1 leverage, you can control (200*100)= 20,000 dollars worth of capital to trade currencies.
Forex lot size and leverage
If you want to become a successful trader, understanding lot size and leverage is a must. Because as a retail trader, you can’t trade without leverage, but Extreme leverage can burn you badly. And lot size and leverage go hand to hand. For example, assume that your trading capital is 200 Dollars and your true leverage is 100:1, then you should choose 0.01 lot size.
Leverage can be a double-edge showed. Leverage may bring benefits for you, and excessive leverage may hurt you. If used inappropriately, then optimal leverage can be lethal.
Using extreme leverage with a practical example of $200 account
Many brokers offer high leverage like 400:1. If your account is $200, then you can control the worth of 80,000 dollars. The average pips size with a trade of $80,000 is $8. If your trade lost 50 pips, your whole account would be wiped out. That’s why lot size is important. If you use a small lot like 0.01 or 0.02, then even with 300 pips movements, your account will not vanish.
What is the best leverage for $100 account?
Do you know what is the best leverage for 100? The best leverage for a $100 account is 200:1. Although I don’t recommend using a low capital account like $100, if you don’t have more than 100 dollars, use at least 200:1 leverage. because this is the best leverage for $100
What is the best leverage in forex markets?
If you don’t limit the capital option like 200 dollars or 500 dollars and ask what is the best leverage in Forex and which leverage professional traders use, my answer would be 1:50 leverage.1:50 leverage forex is the choice most professional and experienced traders use.
Do you have to pay back leverage forex?
No. The answer is absolutely not. You don’t need to pay back forex leverage. Many traders confuse themselves with credit lines and forex leverage. Actually, forex leverage level works as a safeguard. You need to keep your trading position open until your positions reach margin call. By taking leverage, you are using brokers’ money to open positions. If you make a profit, then nothing will happen.
You can withdraw anytime and enjoy yourself. But if you make a loss, then your amount of loss will also be giant as you are trading with borrowing money from a broker, so your broker will take it in the name of leverage. But if you think you need to pay extra cash for what you take from the broker in the form of leverage, then you’re wrong. Your broker will take it from your capital. That’s why we call leverage a double-edged sword!
How much leverage does TD Ameritrade give for Forex
TD Ameritrade forex leverage ratio is 50:1. This is the maximum leverage offered by this broker.TD Ameritrade offers more than 70 currency pairs to its traders. This broker offers many more benefits for its US clients. If you are a US citizen, then whether you trade or not, you should visit them and check out the benefits they provide.
Effective leverage and misuse of leverage
if your trading capital is not that heavy, like if you trade with only $200, then the best leverage for $200 account would be 100:1. But if your forex trading capital is big, like $2000, then effective leverage for you would be 1:50 leverage Forex. Many novice traders make misuse leverage. They open trades in high volume, taking high leverage and thus blow their whole trading capital.
So if you are also a newbie, then stick to 100:1 leverage. More than this level of leverage would be a suicide attempt for you. As a newbie, your initial investment would not be less than 200 dollars. If you can afford more than this amount, that would be great. But less than this amount, like 20 dollars or 50 dollars, would not be recommended by professionals. Those are not financial markets trading. Rather those are gambling!
Bottom Line
Best leverage for $200 account is 100:1. Best leverage for $100 account is 200:1. But which level of leverage do i recommend? I personally suggest you all to deposit minimum 1000 Dollars in your trading account and try to use 50:1 leverage. If you can do that then your trading capital is safe. You won’t blow your account easily. Before you become a professional trader never take 100:1 leverage and never trade depositing only 200 Dollars.
