What is 1:50 leverage forex is a technical question asked by many but understood by only a few. 1:50 leverage means that for every one dollar in my account, I can place a trade worth fifty dollars. for example, if I deposit 1,000 dollars in my trading account, I would trade worth 50,000 dollars.
As a forex trader, you should clearly understand how does leverage works in forex and both the benefits and drawbacks of leveraged trading. When you borrow money from a forex broker to use it in your currency trading, that is leverage in forex trading. With this borrowed money, you can trade more significant positions.
If your analysis goes right and your maximum leverage for forex trading works for you, you can substantially amplify your profit. You walk like a hero in front of your friends! Dance like Michael Jackson.
But if your analysis goes wrong, then excessive leverage could turn out as a villain to you. So you could make a considerable loss also for using leverage.
In this case, you will be broke faster than rock & john cena kick your ass off! So, in brief, you can call it a double-edged sword.
Forex leverage and lot size
We know that standard trading is done on 100,000 units of currency pairs, so for trading this standard lot size, you should use 1:50 leverage forex.
And it’s an opportunity for us, retail traders, that most of the regulatory and renowned brokers like FXCM, OANDA, IG Markets accept 1:50 leverage in currency trading.
Do you know what is a good leverage ratio for forex? If your answer is 1:50 leverage forex, then you are absolutely right. Many professional and bank traders use this leverage ratio in their day-to-day trading.
But if your trading capital is 40,000 or less than that, then you should use higher leverage like 1;200. However, 1:200 or 1:100 leverage seems risky.
If you consider that the forex market changes less than 1% each trading day, these ratios won’t look frightening.
Best forex leverage for beginners
If you are a newbie, then never ever trade taking high leverage. As a day trader, you should trade using as low as 1:10 leverage. Newcomers make too many mistakes when it comes to trading. Among them, using high leverage is the lethal one. So, until you make yourself a technical and fundamental expert and become a professional trader, my strong recommendation is to stick to 1:10, what is the best leverage in forex for noobs. Apparently, it may seem it’s very low leverage, but in the long run, you would benefit because this one is the best leverage for forex beginners.
what is the best leverage for $100
First of all, I don’t recommend trading with 100 dollar capital. But if you are confident enough that you have a rock-solid strategy to make a profit, you understand money management correctly, and most importantly, you won’t lose money, then start with 100 dollars. But if your trading account balance is as low as 100 dollars, don’t play down your leverage ratio. Instead choose a 1: 500 ratio, what is the best leverage for 100
What leverage should I use forex?
No one can tell you exactly Which leverage you should use. It depends on your trading capital, trading style, your broker, and some other factors. If you have enough capital in your wallet and you wish to trade with a top-class, highly regulated broker, then go for 1:50 leverage forex.
If your trading capital is very low, like 500 dollars or 100 dollars, and you don’t care much about brokers’ high regulation, you have to choose high leverage like 1:500.
Conclusion
In this piece of content, I tried to cover everything from how forex leverage works to 1:50 leverage forex. If you read the above content attentively, most of your confusion will be removed regarding forex leverage and lot size. Still, if you have a problem understanding, feel free to ask me through the comment box.
Frequently Asked Questions ( FAQ)
Although it is not recommended to use too much leverage on forex, if you are experienced enough and don’t have enough capital to trade, my suggestion is to take at least 1:200 leverage. For 500 dollars 1:200, leverage would not be wrong.
In the currency market, 1:100 leverage means for every 2000 dollars in your account; you can trade up to 200,000 valued dollars. But, remember, leverage trading is very risky. That’s why I don’t suggest everyone trade taking so much leverage.
But experienced traders can manage the risk and earn a vast fortune using leverage. If you use leverage, you can gain massive wealth. On the contrary, if your trade goes against you, you have to end up blowing up your trading account.
Only if you are an experienced trader, then use leverage. And for 2000 dollars, the perfect leverage would be 1:50
